
Book _.Ji9-d_5 



TI-iE: vni 



vS J ib 



PHILOSOPHY OP PRICE, 



And its 



RELATION TO DOMESTIC CURRENCY, 



SECOND EDITION. 



By N. a. dunning. 



•'Ill fares the land to hastening ills a prey, 
"Where wealth accumulates and men deca.y."— Goldsmith. 



WASHINGTON, D. C: 

The national Economist Publishing Co. 

1890. 



-^ 



COPYRIGHTED. 

1887. 



CONTENTS. 



Petsfacte 



CHAPTEE I. 

Price— What it Is, and how established ; The theory of 
price; Value in use and value in exchange; Commercial 
value; Supply and demand; Overproduction; Ability to 
purchase ; Conditions compared ; Labor the sole producer of 
wealth; Visible and invisible capital; Products purchases 
money; How wages are reduced; Products of labor the 
ruling factor ; Eelations in exchange of money. 

CHAPTEE II. 

Price and its Dependence upon Currency — The discov- 
ery of money; More money higher prices, less money 
lower prices; Money during the Dark Ages; Contrast 
between an abundance and want of currency; Effects of a 
decreasing currency; Worst effect upon labor; Conflict 
•between labor and capital; The quantity of currency gov- 
erns price; Unjust money system; Loss to the country 



CONTENTS. 



through enforced idleness; Quotations from nearly 100 
authors and statesmen. 



CHAPTER III. 

Price and Its Relation to Business — Story of contraction ; 
How bonds were sold ; Public Strengthening Creait Act ; 
Intent of tlie law ; Silver demonetized ; Grant's letter ; Re- 
sumption ; How bonds can be paid ; Decision of Supreme 
Court on the Legal Tender Act; Table of currency per 
capita ; Table of failures each year ; Table of payment of 
national debt ; Henry Clay on currency ; Comj)arison of 
prices ; Overproduction explained. 

CHAPTER IV. 

Kind and Amount of Currency — "What we want; A 
distinctive currency ; Gold demonetized ; Silver demone- 
tized ; Money in the Old World ; Money a measure of value ; 
Bryant on the power of money ; Kind of currency needed ; 
How money is redeemed ; Thomas Jefferson on paper money ; 
Currency bottomed on taxation; Extracts from report of 
Silver Commission ; Objections to metallic currency ; Gold 
and silver a commodity; Amount of work performed by a 
dollar, 

CHAPTER V. 

Value and its Relation to Currency — Aristotle on value 
of money ; What is value in money ; Argument of the yard- 
stick ; How government should provide money ; Ancient 
idea of money ; 90 per cent of business done with money 
having no value ; One commodity cannot measure the 
value of another ; Fluctuations of gold and silver ; Table 
of fluctuations ; quantity establishes value ; Difference 
between a treasury and a bank ; Mistakes of government. 

CHAPTER VI, 
Protection to Home Industry and Contraction oi Curren- 



CONTENTS. lU 

cy ; Synopsis of the argument of protection ; Benefits of protec- 
tion ; Its aim and object ; Conditions surrounding it ; Emigration 
and currency in connection with protection ; Protection to 
all or none; The act granting foreign pauper labor con- 
tracts of 1864 ; Money appropriated to carry it into effect ; 
Contraction and protection, one or the other must cease. 



CHAPTER yil. 

CONCLUSIONS. 

War between capital and labor ; The only remedy ; 
Reason for depression in business ; How to examine these 
questions; Hon. L. H. "Weller's formula; Why cheap prod- 
ucts make hard times ; Hard times produce crime as well as 
poverty ; Kind and amount of currency ; Proportion of rich 
to poor ; What the export of silver has done ; Wheat from 
India and Dakota ; Standard of value ; Standard of payment ; 
ELnights of Labor ; Answers to questions. 

APPENDIX. 

LECTIJEE DELIVERED BEFORE THE INGHAM COUNTY FAEMEES' IN' 
STITUTE AT MASON, MICH., FEBEUAEY 11, 1887. 

Labor — Reasons for its present condition, and remedy 
pointed out ; The laws governing land and currency responsi- 
ble ; An expose of our land system ; Our currency system and 
its relation to labor ; Are we going back to barbarism i 



PREFACE. 



In attempting to place tliis volume before the public, an 
apology would perhaps be in order. While this may be true I 
.am led to believe my excise will sufficiently justify the act. 
At an early age I began the business of merchandising, 
which I have recently given up. From 1862 to 1885 I was 
■continually engaged in selling dry goods, groceries, etc., over 
the counter to my fellow townspeople and farmers from the 
adjoining country. Upon going out of business I was surprised 
to find myself, though comparatively young, the oldest business 
man in our city — my business sign being the oldest in town. I 
liave since had leisure to examine into the changes of the past 
twenty-three years, and am astonished at the result. But eight 
men, out of more than one hundred and eighty who had tried to 
accumulate property by going into mercantile and mechanical 
business, had made a success. And not a single manufacturing 
establishment had weathered the storm. In fact, the businesfj 



VI PREFACE. 

ventures in our town of 2,000 inhabitants resulted about as 
follows: Every person who had engaged in the business of 
loaning money, no matter how small his beginnings^ had made 
a success, while about ninety-five per cent, of all other business 
ventures had proved a failure. Beginning with this revelation 
I have carefully and diligently sought for the cause, and to my 
-own satisfaction at least, I have succeeded in finding il My 
-experience is simply that of all others engaged in similar voica- 
tions. I used to buy large bills of sroods, bring them honaie, 
;sell them to my customers and have a margin of profit, I 
would give credit to those asking it, to a more or less extent. 
'The loss from this source was but trifling. After a time, buy 
goods as cheap as I could, the decline in price during the year 
consumed my profits. Besides this, men whom I had for 
years trusted with goods, and had paid promptly, either asked 
for more time or failed to pay altogether. This continued 
until self -protection compelled me to curtail my business — ^buy 
much less goods and give but little credit. A general distrust 
took the place of confidence, so much so, that everyone asking 
credit was an object of suspicion. A sort of forced economy 
seemed to take possession of the people, which upon close in- 
spection proved only an inability to purchase what they 
actually needed. A struggle for cheap goods, to sell cheap in 
order to meet the wants of the people, who for some unkno-wm 
cause were not prospering in their business, took tlie place of 
regular trade, and with it legitimate merchandising ceased. 
Now, banki-upt stocks, auction stores and l)rokers' offices reign 



PKEFACE. Vii 

supreme in all branches of trade. During all these years, when 
values of all other forms of wealth have shrank to such an 
alarming extent, money has continued steadily to increase in 
value, and now holds high carnival over all others. That this 
one branch out of all our vast and varied enterprises should 
thrive and all others wither and go down, is in my judgment a 
subject of profound importance. It calls for the most careful 
examination and the highest order of statesmanship. Labor,, 
which is the architect of wealth in all its forms, calls loudly 
for justice and fair play. The innumerable business ventures 
of our people demand recognition of their right to survive. In 
fact, the continued preservation of our civilization, our high 
standard of morals, and our social and political equality, all 
conspire to direct attention to this ever increasing separation 
of values. 

This volume, which I venture to place before the public, 
contains my ideas of the cause and its remedy. However much 
they may be at variance with others, I have endeavored to have 
them represent independence of thought and honesty of purpose. 

I have received many suggestions of value, and many kind 
expressions predicting success, for which I am truly grateful. 

To my esteemed friend, Milton Eyan Esq., I desire to 
acknowledge a debt of gratitude not easily repaid. He has,, 
with characteristic unselfishness, aided me in every manner 
possible in the prosecution of this work. He has given me 
many valuable ideas and assisted in the development and com- 
pletion of many intricate arguments and propositions, which 



VIU PKKKACE. 

m a work of this kind must of necessity "be tliorouglily inves- 
tigated. 

A careful perusal of this volume will enable the reader, if 
not convinced of the correctness of the propositions put forth, 
to at least become conversant with the arguments in their favor. 

N. A. D. 



THE PHILOSOPHY OF PRICE 

AND 

ITS RELATION TO DOMESTIC CURHENCY. 



CHAPTER I. 

PRICE WHAT IT IS, AND HOW ESTABLISHED. 

In all ages past, the conditions of mankind, morally, so- 
cially and intellectually have been subject to changes, some- 
times for better, but often for worse. Why these varied 
conditions exist, has led to much thought and consideration. 
Men, who have built for themselves enduring monuments, are 
those who have sought and been successful in discovering and 
pointing out ways and means by which the human family 
could make advancement toward the consummation of life's chief 
end — peace, happiness and prosperity. While attempting this, 
many theories have been put forward; some good, others bad, 
many impracticable, occasionally one sound enough to stand the 
test of centuries. Experience has performed an important 
part in this connection, and, while it has not, in all cases, 
selected that which was best, it has retained but a small portion 
of that which was bad. But, as civilization progresses, new 
questions are continually presenting themselves for solution. 
Sometimes they are old ideas coming up under diiferent cir- 



10 PHILOSOPHY OF PRICE. 

ciimstances in new forms, and again the same proposition may 
remain unsolved for many years, yet, periodically claiming the 
attention of statesmen and scholars. 

Most men have theories for all the actions of life, and 
those who know the least concerning the real truth are apt to 
advance a theory the most promptly. For this reason, nothing 
but a careful study of the subject will enable any person to 
even approximate conclusions toward the right. 

The theory of price, what it is, how made, and the factors 
governing it, is no exception to this general rule. The more 
thought I have given this subject the more profoundly I am 
impressed with its importance. Notwithstanding this question 
has been under discussion for hundreds of years, it has assumed 
gigantic proportions in our own nation within a recent period. 
Without further remarks I will begin its consideration. 

Adam Smith, the father of political economy, attempts to 
prove, in his great work, "The Cause of the Wealth of Na- 
tions," the idea of a double value, or, as he expresses it, "a val- 
ue in use and a value in exchange." This proposition has been 
assailed by some of the ablest writers since that time, such as 
Mill, Senior and others. It has likewise been defended by 
some of the greatest minds the world has ever known. It is 
therefore now, as it has been in the past, a debatable question 
and calls for careful, candid consideration before opinions with 
any degree of honesty or intelligence can be given. 

Value is, without doubt, an essential element used in ex- 
change, but I do not believe that exchange is an essential ele- 
ment in value. In my judgment there is a manifest difference 
between value in use and in exchange which should be fully 
examined. Value in use is the holder's value ; value in ex- 
change is the seller's value. ^ A person may hold a thing, not 
in order to sell or exchange it, but in order to use it. Many 
things may possess value that are not exchangeable at all. If 
we limit value to things that are wholly exchangeable we shall 



WHAT IT IS AND HOW ESTABLISHED. 11 

exclude a large and very important class of commodities. A 
man may own an article which has no exchangeable value and 
at the same time place a very high value upon it himself, be- 
cause he understands its use and can turn it to a profitable 
account. Many instances showing the truth of this proposition 
might be given. Prof. Syme.says : "Value in use is the basis of 
all industrial activity. Without it there would be no produc- 
tion, and without production there could be no exchange. To 
limit value to exchange then, is to deprive economic science 
of the very foundation on which the whole superstructure 
rests." Mill and others say : "There are two elements to value 
— utility, and scarcity or difficulty of attainment." This can 
not be true, as these two elements cannot of themselves consti- 
tute value. There are many things, such as water, that may be 
useful, but at the same time have no value. Also an article 
may be exceedingly scarce and yet be valueless, neither diffi- 
culty of possession nor attainment, though combined with utility, 
will confer value. Water, however useful, and ever so- 
scarce, as in the case of a traveler in a desert, does not have any 
value conferred upon it on that account, if the traveler does not 
want it.. But if he wanted it, — if he was suffering for it — and 
if he believed it would satisfy his thirst, water would then be 
immediately invested with a value in his estimation which 
neither its acknowledged utility nor its inaccessibility or scarcity 
previously conferred. 

Yalue in use is an absolute term. Yalue in exchange, 
commercial value, or price, is a relative term. The intrinsic 
value of a thing is what it is worth to me, if I keep it. 

The price, or commercial value of a thing, on the other 
hand, is what some one else will give me for it. The price of a 
thing is what it will bring in the market; and while there is 
only one price, there are always several values. A price can 
only be arrived at when two or more values coincide, or when 
the estimate put upon an article by a seller agrees with the 



12 PHILOSOPHY OF PKICE. 

estimate put upon it by a hnyer. Not only do individuals differ 
in their ideas of commercial value (as I shall call it), but they 
have different methods of arriving at them. The commercial 
value of an article is always ascertained by a comparison of in- 
di\'idual values. Each party to an exchange demands a certain 
amount. If the demands are equal, the price will be made and 
the exchange will be effected. If the demands are unequal, no 
price will be established and consequently no exchange will take 
place, unless the demands of the one rise or fall to the demands 
of the other. The price of any article, therefore, is simply its 
commercial value. Almost everything, at the present time, 
and, as the arts and sciences are advanced, everything, no 
doubt, will have two values — commercial value or price, in- 
trinsic value or worth. The first always fluctuates, the latter 
never. The first depends entirely upon the conditions sur- 
rounding it; the latter remains the same under all circumstan- 
ces. The iron girders which span the stream are not changed 
in their intrinsic value by their use, no matter if their com- 
mercial value varies from five to fifty cents per pound. This 
being true, price, then, is the result of commerce, trade or lous- 
iness. It is purely a commercial phrase, and obtains recognition 
in the language of the world by its connection with traffic or 
exchange. We inquire the 'irice of wheat to-day, and are in- 
formed it is worth one dollar per bushel. This is the commer- 
cial value placed upon that product from tlie present under- 
standing of the situation it occupies. To-morrow it may be 
higher or lower, according to a better knowledge of all the facts 
relating to it; but during this fluctuation it requires only the 
same quantity to relieve hunger or sustain animal life. 

That price is commercial value, and that commercial values 
are always changing, I conclude are facts ])eyond question. But 
when we enter upon an investigation of the causes for this dif- 
ference in price, why it is less or more at some times than at 
others, we pass into a field almost limitless in extent, M-hieli 



WHAT IT IS AND HOW ESTABLISHED. 13 

shows signs of constant travel by the most profound thinkers 
of all ages past. For this reason we are met at the commence- 
ment with innumerable theories and speculations. Some 
writers have treated the subject as a matter of but trifling im- 
portance, while others have written volumes upon it. Political 
economists have sought to make it plain, but, in my judgment, 
have utterly failed. There seems to be no advancement beyond 
the old ideas of one hundred years ago. 

While the world is making rapid strides in all other arts 
and sciences, why should it not in that art or science — no 
matter which it is called — that treats of the desired end of all 
labor, the accumulation and enjoyment of wealth ? 

When people come to understand that political economy 
treats of the most common and ordinary affairs of life — the 
business relations of men to each other — that these relations are 

» 

viewed from different standpoints, they will learn to look upon 
that science with less awe, and beheve writers upon that subject 
less infallible. 

In the early ages of our race there were no commercial 
relations, no exchanges, and consequently no commercial value 
or price. The intrinsic value of food and raiment was alone 
considered. Soon, however, trade, barter or exchange came 
into use among the different families and tribes. The products 
of one tribe were exchanged for those of another. Then the 
idea of a price, or commercial value, began to obtain and has 
continued to the present time. 

To ascertain what makes that price, what constitutes the 
commercial value of the products of labor, is the subject of this 
chapter. 

Many writers have settled down to the theory that supply 
and demand wholly establish the price ; that with a surplus of 
products prices always decline, and with a scarcity always ad- 
vance. This theory has come to be almost the only recognized 
explanation of this question. It has been adopted by many 



14 PHILOSOPHY OF PKICE. 

able writers, and quoted as true by botli statesmen and scholars. 
This is a dangerous doctrine, and from it emanates many de- 
structive theories. This dogma of supply and demand can, 
with propriety, be placed beside Ricardo's theory of rent or the 
Malthusian theory of the population of the earth. Each has 
some foundation in fact, but when arguments are brought to 
bear upon them, the superstructure is quickly ascertained to be 
much larger than the foundation, and other theories must be 
manufactured and put forward to make up the necessary sup- 
ports. The theory of supply and demand will not admit of 
want and hunger amidst plenty and low prices. It cannot ex- 
plain the stubborn fact of pauperism and distress during an era 
of great abundance and cheap commercial values. The signs 
of the times and the hard experiences of daily life are a direct 
refutation of its soundness. , 

It is claimed that overproduction is the prime cause of all 
this difficulty, or in other words, that the people are suffering 
from the effects of a surplus of success, or from the evils of a 
reckless and persistent industry. For, if the term "overpro- 
duction" means anything, it is that our business enterprises 
have been too successful; that the economic laws governing our 
people are too perfect and our inventive genius too prolific of 
good results; that tlie nation has been so prosperous and so 
fortunate in its undertakings that the present hard times have 
been brought upon us in consequence. Here is an argument 
where too great a victory brings defeat, too much happiness 
brings distress and misery. Let us examine the subject in that 
light. Does an overproduction of wheat and beef cause my 
neighbor to go hungry ? Is an abundant supply of clothing the 
cause of his being ragged ; or of 1)oots and shoes the cause of 
his going barefoot? Is yonder supply of wood and coal a 
reason for his being half frozen with wintry winds? Certainly 
not. In all these cases the supply is abundant, and the demand 
most ui-gent, yet the supply is not lessened nor the demand sat- 



WHAT IT IS AND HOW ESTABLISHED. 15- 

isfied. Why ? Because there is a want of abihty to purchase. 
It is plain that there can be no real overproduction unless a 
large surplus remains after all the people have been fully sup- 
plied with the necessaries and comforts of life. The public 
cannot overtrade by distributing each year's productions among 
those who really need them to use. Too high prices cannot be 
paid for labor, unless the laborers in general actually gain more 
than their equitable share of the year's productions. Neither 
can there be an overstock of laborers so long as thousands are 
suffering for want of the very articles these laborers would 
gladly produce, if they could be employed. There cannot be 
too many houses, when they would be filled with tenants able 
to pay the rent if work could be obtained. We must look, 
therefore, for the real cause of these calamities, not in overpro- 
duction, but in the power that governs the distribution of the 
products. It does not matter how urgent the demand or 
abundant the supply, there must be some ability to purchase, 
or the demand is not satisfied. How, then, can it be truthfully 
said that supply and demand are the sole arbiters of price ? 

John Stuart Mill discusses the question at greater length, 
but with the same conclusion. He says : 

"The argument against the possibility of general overpro- 
duction is quite conclusive, so far as it applies to the doctrine 
that a country may accumulate capital too fast; that produce in 
general may be increasing faster than the demand for it, 
reducing all persons to distress. This proposition, strange to 
say, was almost a received doctrine so late as thirty years ago." 

There can be no price without a purchaser ; no purchaser 
without the necessary ability to purchase. Therefore it must 
follow that the ability to purchase, in all cases, absolutely estab- 
lishes the commercial value or price. There may be isolated 
instances of an unexpected demand, or an unlooked for scarcity, 
which will initiate a competition among buyers, yet the wealth 
of the purchasers determines the limit beyond which prices 
cannot be driven. On the other hand, an abundant supply 



16 PHILOSOPHY OF PRICE. 

may tend to lower tlie price of a commodity ; but tlie wealth of 
the people, the ability to hold and not sell, or to buy and hold, 
determines completely and finally how low the price shall go — 
acting at all times as a check and safeguard. Let me illustrate 
this point — that supply and demand do not make the price. 
Mr. A has a good dinner to sell. Mr. B is hungry. Mr. A 
has the supply, and Mr. B has the demand. In this case what 
establishes the price of the dinner; its original cost to Mr. A, 
or IVIr. B's hungry stomach ? Neither. The commercial value 
is finally and fully fixed by the contents of Mr. B's pocket- 
book. It should always be remembered that price knows no 
original cost. No matter how much a bushel of wheat costs in 
production, its commercial value is made without any regard to 
it. The idea that cost of production enters into price is all 
wrong. Price is w^iat it will sell for and nothing else. A 
man may consume a lifetime in making a machine, or some- 
thing else, perhaps of value to mankind, and when completed 
cannot dispose of it for a single dollar. Mr. A may want fifty 
cents for his dinner — it may have cost that much or more — but 
if Mr. B has but twenty-five cents, the dinner must be sold for 
that or remain unsold, and consequently without price, because 
a thing that cannot be exchanged has no commercial value or 
price. If supply and demand were the only factors in price,, 
legislation might, to a large extent, regulate not only the price 
of the products of labor, but of labor itself. It could say to 
the farmer : You shall raise but a certain amount of grain ; 
and to the laborer : You shall do but so many days' work. No 
greater calamity could befall a civilized nation. It would put 
an end to all progress or advancement, and destroy all intelli- 
gence and just emulation. But fortunately this is not the case, 
as the laAVS governing this question are of a social nature, and 
seem to rest on the prosperity and happiness of the whole peo- 
ple, and point with the finger of prophecy to one universal 
republic governed and controlled l)y wise and generous regula- 



WHAT IT IS AND HOW ESTABLISHED. 17 

tions, which aim at making the people equal in all respects 
before just laws. 

'No nation is, or can be, happy or prosperous with low 
prices. They operate as a gradually increasing weight in the 
great race of life ; and those who are the most in want usually 
carry the heaviest burdens. 

The condition of every nation is gauged, as regards 
advancement and social privileges, not by the cheapness of its 
products, but by their higher commercial values. The people 
who place the highest value on their labor and its products are 
the most enlightened, prosperous, and consequently the happiest. 
'xo prove this, I refer to the cheap wheat of Russia and India; 
the cheap rice of China and Japan ; the cheap cotton of India 
and Egypt, and the cheaper wools of the South American 
states. Compare the countries named with our own, or with 
France, England and Germany. These comparisons will prove 
my assertions true. This proposition is a strong argument 
against unrestricted commerce, as the poorest and most degraded 
nations can and do sell their products the cheapest, thereby 
compelling other nations, in their industrial pursuits, to sink 
down to a common level or not sell their products. For it is a 
well established fact that the products of each nation repre- 
sent its civilization, and its social, intellectual and religious 
standing. And, as the products of labor constitute the germ 
and extend the growth of national prosperity, they necessarily 
pay for all things beneficial to mankind in the form of direct 
and indii'ect taxation. Therefore it follows that the products 
of nations differ in cost of production in proportion to their 
different degrees of intelligence and social position. In com- 
mercial transactions, men l)uy where they can buy cheapest ; 
consequently the products of the half savage are taken in pref- 
erence to those put upon the market by more civilized nations, 
thereby forcing civilization out of the markets of the world and 
leaving its products unsold and without price. 



18 PHILOSOPHY OF PKICE. 

"With this view of the question, price assumes a more 
prominent position than many have supposed — a position that 
makes it the arbiter of our joys and our woes, our intelligence 
or degradation. How important, therefore, is a careful and 
candid consideration of the subject, to the end that \ve may all 
be benefited, by ascertaining, if possible, the different factors 
that enter into its composition. 

Since ability to purchase makes the price, and that com- 
juereial values are an important factor in the success or failure 
of this life, let us inquire : 

1. What this ability to purchase is. 

2. From what causes or sources it originates. 

3. How it is obtained. 

In answer to the first inquiry: Ability to purchase or 
possess is ability to labor and accumulate the products of labor, 
called wealth. 

In answer to the second inquiry : It comes from the brain 
and brawn of the toiling millions, and is that part of invisible 
capital called labor, the architect of all wealth. 

In answer to the third inquiry : The ability to purchase or 
possess is obtained by physical and mental labor alone. 

No matter how much political economists differ on othei 
subjects, they all agree that labor is the sole producer of wealth. 
This one fact alone ought to place labor in a position where it 
would receive the recognition and respect which it so jnstly 
deserves. Instead of this it stands on the lowest round of the 
social ladder with every social advantage above it, seeking to 
prevent its climbing higher. While this is an admitted wrong 
to labor which calls loudly for justice and fair play, its condi- 
tion is not bettered nor are its wrongs righted. 

We see, all about us, e\adences of wealth, such as houses, 
farms, factories, railroads, shops, etc., etc. These were not 
stolen; neither are they the spoils of war, nor the result of fraud 
.and knavery. We find by tracing back the history of each 



WHAT IT IS, AND HOW ESTABLISHED. 19 

that at the ultimate stands bare-handecl labor ; that labor and that 
alone was the prime first cause — the fiat of it all. Then I ask: 
Why should the created dictate to the creator ? Why shoul(i the 
accumulated products of labor be placed at all times and under 
all circumstances above and before labor itself? 

Wealth is divided into two classes — visible and invisible 
The former consists of money, houses, merchandise, etc. The 
latter, of physical or mental exertion, stored up by nature in 
the human body as a means of self-preservation. The last 
iDeing the creator of the first, as all visible wealth is the pro- 
duction of the invisible. 

Some may ask how this is accomplished — how these, al- 
most, self-evident truths could remain undiscovered all these 
years under the light of modern civilization — why have we not 
thought of them before? I answer : Because as a people, char- 
acteristically, we are not inclined to search for causes, but are 
constantly looking for results or eifects. Men gather riches; 
nations become wealthy. These facts are plain, yet but very 
few ever take the trouble to examine into the cause. We see a 
Jiew country to-day, almost an unbroken forest, perhaps, with 
here and there scattered through it a few hardy pioneers. 
TTears afterwards the wilderness has disappeared. In its place 
we find great cities, pleasant villages, splendid farms, costly 
churches, schools, and all the numerous adjuncts of civilization. 
Where did they come from? How came they here? The 
change seems impossible, miraculous; yet all this is the rich, 
ripe fruit of labor, of honest toil. 

We might, perhaps with profit, notice how this change 
Avas brought about. It should be well understood as it has been 
nan's chief employment from the days of Adam. 

Mr. A comes to this locality with his family, and, as is 
ihe usual custom, builds a log house and goes to work, clearing 
up his land. He clears off a small piece of land and plants it 
to crops. While they are growing he makes more improve^ 



'20 PHILOSOPHY or PKICE. "^^ 

ments. His products the first year perhaps feed and clothe 
himself and family. Those of the second year leave him a sur- 
plus. At this time Mr. B makes his appearance with neither 
shelter nor food, but is able and willing to work. Mr. A 
contracts with Mr. B at once to exchange some of his visible 
capital, such as corn, wheat, and a shelter, for some of Mr. B's 
invisible capital called labor. Then there are two at work. 
Soon Mr. B has exchanged more of his invisible capital than he 
has consumed of visible, and finds himself the possessor of visi- 
ble capital. With this he starts out for himself ; and in like 
manner others come, and make a start in life, the result being 
that soon the once dense forest is made to blossom with e\'i- 
dences of visible wealth in every direction — all brought about 
by that one agency — labor. 

Again, we find Mr. A with ten dollars in money, Mr. B 
with ten bushels of wheat, Mr. C with neither money nor wheat 
and a family to support. Mr. C wants bread to supply his 
family. How is he to obtain it? Let us examine. Mr. A 
wants some wood cut for market. Mr. C engages to prepare 
the wood, that is, he sells Mr. A ten dollars' worth of his invis- 
ible capital. When the labor is performed, or when Mr. A 
has received ten dollars' worth of invisible capital from Mr. C 
in the shape of a certain number of cords of wood, he rennmer- 
ates Mr. C with ten dollars in cash. This ten dollars Mr. C 
pays to Mr. B for his ten bushels of wheat which Mr, C's fam- 
ily at once begin to consume. Mr. A, by this transaction, is 
wealthier by the profit on his wood, and Mr. B by the profit on 
his wheat ; and the nation at large is wealthier by the aggregate 
of both. This process of accumulating wealth has been going 
on during the history of the world, and yet, but comparatively 
few persons either care about, or know, the conditions and cir- 
cumstances surrounding these ever ])resent and every day pro- 
ceedings. 

From the above conclusions we can clearly draw "the infer- 



WHAT IT IS AND HOW ESTABLISHED. 21. 

ence that the more Mr. A pays Mr. C for his labor, the more 
Mr. C can pay Mr. B for his wheat; and the more Mr. B re- 
ceives for his wheat, the more he can expend for clothing, gro- 
ceries, farming tools, etc., etc. Here again we are reminded of 
the prominent position that price occupies in all the commer- 
cial transactions of life. We notice that the price of one arti- 
cle — ^laJDor — governs all other prices, in the normal condition of 
trade, that the products of that labor come in direct contact 
with. It determines the price of B's wheat, and the price of 
his wheat determines the price of all his purchases. The neces- 
sity of having a fair price, and to begin in the right place, is 
not only just, but important to the general welfare of mankind. 
That place is with labor. When labor brings a good price, 
everything else does. But when labor is poorly and grudgingly 
paid, dull times overtake us and all business drags. Upon 
this point rest several propositions of vital importance to every 
individual and nation : 

1. The degradation of every nation is measured accurately^ 
by the amount of the products of its labor given in exchange 
for a dollar, or unit of their currency. The poorest, meanest,, 
most servile and abject nation and people, always have, and 
always will, barter the greatest amount of their products for a 
dollar. 

2. The civilization, grandeur, position and social status of 
every nation is gauged absolutely by the amount of the neces- 
sities and comforts of life that a day's labor will purchase for 
its people. 

I bring as proof of these assertions the wages received and 
position occupied by the people of every nation on earth. 
Tliese propositions are too plain to be disputed. Compare the 
low wages of India, Egypt, China and many other countries 
that might be mentioned, with the wages paid for labor in the 
United States, England, France, Germany and other Hke 
countries, and then note the difference of their standing among 



22 PHILOSOPHY OF PRICE. 

the nations of the world. The proof is absolute and positive. 
Here, again, we find that labor is the prime factor in bringing 
about the best interests of the human family. Its only terms 
for such service is being well paid — that is, justly compens- 
ated. 

In my judgment, the greatest error into which the com- 
mercial world has fallen — and that error seems to ha\^ made 
way for many others — is, that money buys or purchases prod- 
ucts. This cannot be true. A little candid consideration of 
the question will demonstrate at once that products always buy 
or purchase money. The child who sold his pennies for candy 
was much nearer the truth in his ideas than his father who 
bought his coat with cash. This point is of the utmost import- 
ance in the discussion of the question of price. There may be 
those who will not admit the correctness of this proposition 
because it is an innovation and somewhat novel; besides it de- 
molishes at once many oft quoted and long cherished theories. 

Let us take the example of the farmer, and inquire why 
he raises wheat. His object is, first to feed his own family, 
and then with the surplus he purchases money. Bear in mind 
we are not discussing barter, but commercial transactions where 
money is a factor. Now, if he uses some of this money to 
pay his debts, he is simply making a delivery of what he had 
sold and agreed to deliver some time previous. If he wishes 
to "purchase'' a wagon, for instance, as the phrase goes (wrong 
nevertheless), what factors enter into that transaction ? 

The wagon-maker has made (produced) a wagon to pur. 
chase some money with, and he buys as much money of the 
farmer as he can for the wagon. A bargain, bear in mind, is 
the result of a mutual understanding between two or more 
persons. 

The farmer goes into the market with his money to sell 
for a wagon. The person who will pay him the most for his 
money, that is, sell him a wagon "the cheapest," as the term is 
used, will iturcluuse his money. The wagon-maker paj's, or sells 



WHAT IT IS AND HOW ESTABLISHED. 



23 



this same money to his workmen who had already paid for it 
with labor by manufacturing the wagon. Here we have traced 
money from one producer to another, and find it does not pur- 
chase at all, and in its legitimate use has no purchasing power, 
as it is a creation of law, and not in the true sense a product of 
labor. Money never goes in advance. Labor takes the lead, 
money follows. It is the incentive for all production. De- 
stroy the fact that production will buy money, and to a large 
extent all surplus production will cease. 

There is always an obligation preceding the payment of 
money. That obligation is either labor or its products, or the 
.stipulated payment at some future time of one or both. As 
l)efore stated, money has no purchasing power ; its one function 
is to pay debts. It only levels up the difference in bargains. 
:N"either can money be bartered for money, because it has only 
-the one function. But products can be, and often are, bartered 
for each other, both parties to the transaction being benefited. 
Here we see products exercising purchasing functions independ- 
ent and exclusive of money. But on the other hand, money 
cannot perform its functions without the aid of products, l^or 
does capital employ labor. Labor employs capital always, but 
does not employ money. It only employs some previous prod- 
uct of labor. Money can be utilized only by the laborer, m 
his vocation, as a medium to obtain some product of labor that 
he desires to use. Can a man cut down a tree with a five dol- 
lar bill? He will first sell enough of his money to obtain an 
axe, and with that product of labor cut down the tree. Capital 
employs labor? Never. Capital is only sold for labor. That 
is the true and only sense in which it can be used. This 
explains why so much money is idle in dull times. Men who 
have money part with it for labor. In time they buy money 
with the products of that labor. When such products will not 
purchase more money than was sold to purchase the labor m 



'24 PHILOSOPHY OF PRICE. 

the first place, there is a loss. When they will bring morCj 
there is a gain. 

Wages are reduced by men going into the market to sell 
money for labor. Those who M'ill pay the highest price for the 
money, that is, give the greatest amount of labor for it, are sure 
to get it. Hence, the strife among laborers to buy money 
brings down the price of their own efforts. 

If it were true that money emjjloys labor, then, with all 
"the money hoarded, labor would of necessity cease. 

The fact is, a desire to possess money in order to gratify 
• some other desire in its disposal is the main incentive to labor. 
This incentive includes the natural disj^osition of mankind to 
use all his faculties to sustain life. 

We are accustomed to say that money is invested in prop- 
erty, but this is not true. Money is no more invested in prop 
erty than the yard-stick is invested in the cloth that it meas- 
ures. When money has passed from one person to another, 
either as a loan or in payment of property, it is ready to be 
lent again or to be paid for another piece of property. The 
money is no more used up by passing from one person to an- 
other than the yard-stick is used up by measuring a single piece 
of cloth. We are often told, in the money articles of daily 
newspapers, tliat the money of the country has been used up in 
railroads; but u])on travehng over these roads we see evidences 
that a great deal of labor has been expended in grading them, 
furnishing the iron and timber and so forth, but we do not see 
any money. If the money has been invested in these roads, it 
has now gone somewhere else; and it is still going to and fro in 
the eartli, and up and down it. 

How true this is, and yet how few ever think of it in this 
light. In one breath we hear men say : " Times are hard be- 
cause the money has been sunk in speculation," and " there is 
just as nmch mone}' as ever in the country if it could be found." 

This places the products of labor as the ruling factor or 



WHAT IT IS AND HOW ESTABLISHED. 25 

sole purchaser. And when products are cheap it means that, 
money is dear, and when products are dear, that money is 
cheap. Money is inert matter. Men gather it together and 
there it remains until some one wants it, and then it is bought, 
eitlier with an obligation or with labor and its products. 
When we take this view of commercial relations, many of the 
most intricate phases of business are made plain. We can then 
discover the hidden sources from which financial depression, 
low prices, and labor strikes emanate; and can also catch a 
glimpse of those fountains from which streams of plenty and 
prosperity flow. 

This proposition clearly shows us where and how to look 
for the true solution of price. It enables us to examine intel- 
ligently one of the most intricate subjects of economic; 
science. That products purchase money I believe is a sound 
doctrine, and one that will be accepted by all writers and' 
thinkers in the near future. 

In looking in upon our social and business relations, we 
cannot fail to see the prominent position occupied by price. 
It is brought to our attention from almost every direction, and 
by the careful study of almost every subject pertaining to 
economic science ; in fact, upon it depends, to a more or less de- 
gree, our social, religious and commercial standing. One of 
old said : '• Price is the dictator of civilization." 

Price, then, is the value put upon labor by the accumu- 
lated products of labor — the recompense given to invisible 
capital by visible capital. It is the war cry that gathers the 
army of capital on one side and labor on the other, keeping 
them in almost perpetual strife. Without it the world would 
relapse into barbarism, aiid the nations of the earth would van- 
ish. Intelligence, civilization and human progress would 
cease forever. Price always should be the cost of well-paid 
labor in production, with reasonable profits for commercial 
exchange. But that is not the case ; it is established by con- 



26 PHILOSOPHY OF PRICE. 

ditions entirely foreign and in no wise related to the cost of 
production. 

A recent writer sums it all up in the following : 

" The existing financial policy of the world is the same as 
that which in all ages has given the power of distributing the 
products of industry to non-producers ; so that while the great 
bulk of all burdens, of all miscarriages, of all follies and (fiscal) 
crimes by government and non-producing classes fall upon the 
industrious producers, no just share of the distribution has 
ever been made to them ; on the contrary, the greater the profits 
from the distribution of productions the greater is the contrast 
in the division between non-producing distributors and the 
producing industries ; the non-producers take to themselves so 
inordinate a proportion that the gap or contrast between the 
condition of distriljutors and producers in times of prosperity, 
or seeming prosperity, continually widens ; the prodigious and 
augmenting wealth of the non-producers and the everlasting 
subjection of the producers to the most moderate and often 
precarious supplies of necessaries. 

The producing classes, the authors and architects of all 
wealth, have never in any age been allowed the distribution 
of their own earnings, of the productions of their industry ; 
nor in its distribution by non-producers have they been allowed 
a just share. 

It has been this "creature" money which has controlled 
the world ; this creature of the law is the sinew of war ; it 
upraises and oversets kingdoms, empires and republics, as in 
time of peace it dominates despotically over productive indus- 
tries ; whosoever conmiands a man's purse, generally commands 
him. That such is the power of money, of fiscal legislation, is 
a truth, known to all men." 

But again, it is also true that the ability to purchase 
depends entirely upon price. They are dependent upon each 
other. When prices are high it slio%vs that the ability to pur- 
chase is increasing. When the ability to purchase is impaired, 
it indicates lower prices ; while the measure of ability to pur- 
chase makes prices higher or lower, the high or low price 
clearly shows the degree of ability to purchase. We see from 
this the sources from which come this ability to purchase. 
Tliis denominator of prices, this motive power of all industrial. 



WHAT IT IS AND HOW :^STABLISHED. 27 

action, upon whicli tlie hopes and fears of all nations are 
placed, should be sought out, carefully nourished and con-' 
stantlj strengthened. "While the accumulation of wealth enters 
into this question, the distribution of wealth is the overshad- 
owing factor. The proper distribution of wealth will solve 
this great problem of price. JSTothing else will. When labor 
and capital each has its just due — when one cannot dictate to 
the other — then will the idea of price be fairly and fully 
appreciated. Further; price, in other words, is the expression 
in money terms of the relation which the unit of money bears 
to a specified quantity, or to the unit of each and every other 
thing in exchange. It is also the expression in units of prop- 
erty and services of the value of the unit of money, and with- 
out having any influence on the relations, is the sure indicator 
of the exchange relations which the units of all other things 
bear to each other. Market-price is the expression in the units 
of money of an equihbrium between the correlative demands 
of buyer and seller. It is, in fact, generally established through 
a competition between sellers, rather than buyers ; the market- 
price of any article being the smallest quantity of money for 
which the unit of such an article is offered for sale in open 
market. By the word unit, when applied to money, is intended 
that denomination in which accounts are kept, and in which 
judgments are rendered for money, as the dollar in this country 
and the pound sterling in England. By the same word, as 
applied to commodities, is intended that specific portion or 
quantity by multiples or fractions of which all quantities are 
accustomed to be described, as a ton for coal, or a yard 
for cloth. The relations in exchange of all other things 
than money are not at all affected by the volume of money, or 
by its increase or decrease. Nor do changes in the volume of 
money practically affect a transaction wherein a seller of prop- 
erty makes immediate purchase of other property with the pro- 
ceeds of such sale. Exchange by barter can be as equitably 



28 PHILOSOPHY OF PRICE. 

effected under one volume of money, and under one range of 
prices, as another. But under a credit system, where contracts 
aggregating a vast amount, to pay money at future periods, have 
been made, steadiness in prices becomes the all-important con- 
sideration, and that steadiness depends on the steadiness in the 
quantitative relation between money and all other things. The 
performance of contracts to deliver commodities or render 
services is not made either less or more difficult by an increase 
or decrease in the volume of money. But nearly all contracts 
in the commercial world are for the future delivery of money, 
and the consideration received and the promise made in such 
contracts are based on existing prices. The command, there- 
fore, which commodities and services may have over money 
in the future, and wliich will find its expression in price, 
becomes a matter of vital importance. 

Whenever under any firmly-established government a 
system of money has been generally accepted, the value of 
each unit of such money l^ecomes a general mental conception, 
which, if it be what is called a value, or metallic money, is not 
based on tlie past or probable future cost of producing the 
material of which it is composed, nor on the average cost of 
its production, nor on the cost of its production in either 
the most or least prolific mine. Nor, if it be what is called 
credit-money, having full legal-tender functions, is that portion 
of it which is unhoarded and in circulation and performing the 
functions of money, based upon tlie present value of the 
promise of the issuer to redeem it, nor upon the proximity or 
remoteness of such redemption. 

Under firmly-established systems the value of each unit of 
either metallic or paper money depends absolutely upon the 
number of such units and the relation they bear to the services 
they are required to perform. 

It is tlie limitation of the quantity of money without 
reference to its cost of production that regulates the value 



WHAT IT IS AND HOW ESTABLISHED. 29 

•of each unit of money, whether it be paper or metauiC. In the 
instance of paper money, limitation is imposed by law ; in that 
of metallic money it is imposed by nature. The effect in each 
case is precisely the same. In the one this limitation is regu- 
lated by the wisdom and judgment of men; in the other 
by the numerous obstacles which nature throws in the way 
of production. The value of money, .of whatever kind, is 
measured by the cost of obtaining it after it has been produced, 
and not by the expense of its production ; and this value is cor- 
rectly indicated by the general range of prices. Hence the 
truth of this proposition: Price is commercial value and is fully 
established by the abihty of the people to purchase, and 
that ability is greater or less as the volume of currency is 
increased or decreased. 




30 PHILOSOPHY OF PRICE. 



CHAPTER 11. 

PRICE AND ITS DEPENDENCE UPON CURRENCY. 

The proposition sought to be made plain and substantiated 
iDeyond contradiction in this chapter is, that price, or conimer 
cial vahie, depends entirely — excepting in cases of a sudden 
demand or an unexpected deficiency — upon the amount of cir- 
culating medium in the country where the price is established ; 
this circulating medium always controlling the ability to 
purchase. That with an increase of currency prices advance, 
while with a decrease they fall. That this has been true in 
ages past I will call economic history to verify. That it is 
proving true at the present time I will bring our owti condition 
as a nation to testify. 

The volume of currency indicates the purchasable quantity 
which can be distributed for labor and its products. The 
greater that amount, the more can be distributed ; the less that 
amount, the less can be distributed. Money, or currency, is a 
medium of exchange, and also a measure of value for the pur- 
pose of exchange. These were the original and primitive 
functions of money; and anything that by common consent 
performs these functions was and is money. The age has 



PRICE AND ITS DEPENDENCE UPON CURRENCY 31 

passed when kings rule by divine riglit ; also the time has gone 
by when any particular creation of Deity is recognized as the 
only material out of which money can be made. Money has 
come to be known as purely a creation of law ; that the fiat or 
command which clothes it with these functions is simply the 
recognized sovereignty of government ; that the material out of 
which it is made is commodity, and only valued as such. In 
tracing this back we find tarter^ an exchange between individ- 
uals and tribes. As barter increased, the necessity for some- 
thing to make up the difference in labor value between articles 
exchanged became apparent. I^ecessity compelled it, and, as 
has been the custom of mankind, it was found. Various expe- 
dients were resorted to — skins of beasts, shells, cattle, iron, 
porcelain, copper, brass, silver and gold, all have had their 
turn ; but in each and every case the commercial value of all 
products was given as a certain multiple or division of the unit 
of whatever was used as money. For example, in this country 
the commercial value of articles is reckoned either as multiples 
or divisions of the dollar ; in England, the same w^ith the pound 
sterling ; in France, with the franc. But, in all these the busi- 
ness or barter had been conducted, as regards buying and sell- 
ing, by common consent. But human progress ascertained in 
the course of time that this money should have another func- 
tion, a debt paying power. This was given it by law. 

]^ow we consider money in our business transactions as a 
legal tender for the payment of debts. This legal tender func- 
tion is given it by law ; consequently money, as used to-day, 
is simply and only the creation of law, as I stated before. 

Money has no purchasing power, but when once the bar- 
gain is consummated money steps in and liquidates the debt. 

If money had purchasing power it would be simply con- 
fiscation, as it would then have the functions both to possess 
and remunerate. This has been wisely withheld. Legal 
tender money being the creation of law, it therefore follows 



S^ PHILOSOPHY OF VRICE. 

that the same power gi\ang it its legal tender properties can 
designate its shape, form, and consistencj. 

Here "we meet with vanons theories, some wild, others rea- 
sonable, all honest. Some would confine the unit of currency 
to a certain quantity of gold and silver. Others would use 
copper, iron, or brass ; again, others would use the faith 
and integrity of the nation stamped upon paper. Thei'e may 
be objections to all these, but in my judgment the last is by 
far the most preferable. 

ISTo matter what this medium of exchange is, no matter 
\rhat the fiat or authority of law determines is money, the 
great question after all is its quantity. 

The truth is, the most enormous power kno-^-n to man, or 
that ever can be his, lies in money — in the increase and decrease 
of its quantity. It is the tide of human affairs upon which all 
things must rise or sink. It is inevitable and cannot be re- 
sisted. This power has been obtained through the carelessness 
of the people, who have been and are now held in ignorance 
for that very purpose. So early as 1557 we find the keen and 
piercing intellect of Bodin saying the following : 

"For men have so well obscured the facts al)Out money that 
the great part of the people do not see them at all. The money- 
ers do as the doctors do, who talk Latin before women, and use 
Greek characters, Aral) words, and Latin ablireviations,^*^^/'?^^ 
that if the iKopU understood their receipts they would not have 
much opinion of them." 

"What was true then is practised now. Take the financial 
reports of Congress ; there is not one person in a hundred who 
can read them understandingly. They are written so purposely ; 
that the people may become disgusted and disheartened trying 
to decipher them, conclude the subject is too deep for their 
intellect, and leave it for others tb interpret. This is exactly 
the end sought and will continually bring distress upon the na- 
tion. If the plain people of the country could have these 
questions fully and simply explained, there would be 



PKICE AND ITS DEPENDENCE UPON CURRENCY. 33 

many vacant seats soon among our present law-makers. 

"Whenever prices have become adjusted to a given amount 
of currency, an increase of that amount, other things remain- 
ing unchanged, will cause a rise, and decrease will cause a fall, 
in prices. But under such conditions other things never do 
remain unchanged. There are powerful causes, moral and ma- 
terial, which invaiiably operate, when money is increasing in 
volume, to moderate the rise in prices, and to intensify their 
fall when it is decreasing. Hence, the fall in prices caused by 
a decreasing volume of money would be much greater in degree 
than would l^e the rise caused by a proportionately increasing 
volume. 

Whenever it becomes apparent that prices are rising and 
money falling in value in consequence of an increase of its vol- 
ume, the greatest activity takes place in exchanges and productive 
enterprises. Everyone becomes anxious to share in the advan- 
tages of rising markets. The inducement to hoard money is 
taken away, and consequently the disposition to hoard it ceases. 
Its circulation becomes exceedingly active, and for the very 
plain reason that there could be no motive for holding or hoard- 
ing money when it is falling in value, while there would be 
the strongest possible motive for exchanging it for property, 
or the labor which creates property, when prices are rising. 
Under these circumstances labor comes into great demand and 
at remunerative wages. This results in not only increased pro- 
duction, but increased consumption, as the wants and expend- 
'itures of laborers increase with their earnings. 

I quote the following from the report of the silver com- 
mission appointed in 18Y6: 

"At the Christian era the metallic money of the Roman 
Empire amounted to $1,800,000,000. By the end of the 
fifteenth century it had shrunk to less than $200,000,000. 
During this period a most extraordinary and baleful change 
took place in the condition of the world. 

Population dwindled and commerce, arts, wealth, and free- 



34 PHILOSOPHY OF PRICE. 

dom, all disappeared. The people were reduced by poverty 
and misery to the most degraded conditions of serfdom and sla- 
very. The disintegration of society Avas almost complete. 
The conditions of life were so hard that individual sellishness 
was the only thing consistent with the instinct of self-preserva- 
tion. All public spirit, all generous emotions, all the noble as- 
pirations of man, shriveled and disappeared as the volume of 
money shrunk and prices fell. 

History records no such disastrous transition as that from 
the Roman Empire to the Dark Ages. Yarious explanations 
ihave been given of this entire breaking down of the frame- 
work of society, but it was certainly coincident with a shrink- 
age in the volume of money, which was also without historical 
parallel. The crumbling of institutions kept even step and 
])ace M'ith the shrinkage in the stock of money and the falling 
of prices. All other attendant circumstances than these last 
have occurred in other historical periods unaccompanied and 
unfollowed by any such mighty disasters. It is a suggestive 
coincidence that the lirst glimmer of light only came with the 
invention of bills of exchange and paper substitutes, through 
which the scanty stock of the precious metals was increased in 
efliciency. But not less than the energizing influence of 
Potosi and all the argosies of treasure from the New World 
were needed to arouse the Old .World from its comatose sleep, 
to quicken the torpid limbs of industry, and to j)lume the 
leaden wings of commerce. It needed the heroic treatment of 
rising prices to enable society to reunite its shattered links, to 
shake off the sliackles of feudalism, to relight and uplift the 
almost extinguished torch of civilization. That the disasters of 
the Dark Ages were caused by decreasing money and falling 
prices, and that the recovery therefrom and the comparative 
prosperity wliich followed the discovery of America were due 
to an increasing supply of the precious metals and rising prices, 
will not seem surprising or unreasonable when the noble func- 
tions of money are considered. 

Money is the great instrument of association, the very 
fiber of social organism, the vitalizing force of industry, the 
proto])lasm of civilization, and as essential to its existence as ox- 
ygen is t<» animal life. Without money civilization could not 
have had a beginning; with a diminishing supply it must lan- 
guish, and, unless relieved, finally perish. 

Symptoms of disasters similar to those which befell society 
during the Dark Ages were observable on every hand during 
the first half of the century. In ISO*) the revolutionary troub- 



PKICE AND ITS DEPENDENCE UPON CUKEENCY. 35 

les betweeD Spain and her American colonies broke out. 
These troubles resulted in a great diminution in the production 
of the precious metals, which was quickly indicated by a fall 
in general prices. As already stated in this report, it is estimat- 
ed that the purchasing power of the precious metals increased 
between 1809 and 1848 fully 115 per cent., or, in other words, 
that the general range of prices was 60 per cent, lower in 1848 
tlian it was in 1809. During this period there was no general 
demonetization of either metal and no important fluctuation in 
the relative value of the metals, and the supply was sufficient 
to keep their stock good against losses by accident and abrasion. 
Eut it was insufficient to keep the stock up to the proper cor- 
respondence with the increasing demand of advancing popula- 
tions. The world has rarely passed through a more gloomy 
period than this one. Again do we find falling prices and 
misery and destitution inseparable companions. The poverty 
and distress of the industrial masses M^ere intense and univer- 
sal, and since the discovery of the mines of America, without a 
13arallel. In England the sufferings of the people found ex- 
pression in demand upon Parliament for relief, in bread-riots 
and in immense Chartist demonstrations. The military arm of 
the nation had to be strengthened to prevent the all-prevading 
discontent from ripening into open revolt. On the Continent 
the fires of revolution smoldered everywhere and blazed out at 
many points, threatening the overthrow of States and the sub- 
version of social institutions. Whenever and wherever the 
mutterings of discontent were hushed by the fear of increased 
standing armies, the foundations of society were honey-combed 
by powerful secret political associations. The cause at work to 
produce this state of things was so subtle, and its advance so 
silent, that the masses were entirely ignorant of its nature. 
They had come to regard money as an institution fixed and im- 
movable in value, and when the price of property and the 
Avages of laljor fell, tliey charged the fault, not to the money, 
but to the property and the employer. They were taught that 
the mischief was the result of overproduction. ISTever having 
observed that overproduction was complained of only w^hen the 
money stock was decreasing their prejudices were aroused 
against labor-saving machinery. They were angered at capital, 
because it either declined altogether to embark in industrial 
enterprises or would only embark in them upon the condition 
of emjiloying lal)or at the most scanty remuneration. They 
forgot that falling prices compelled capital to avoid such enter- 
prises on any other condition, and for the most part to avoid 



36 PHILOSOPHY OF PKICE. 

tliem entirely. They did not comprehend tliat money in 
shrinking volume was the prolific parent of enforced idleness- 
and poverty, and that falling prices divorced money, capital, 
and lahor, Init they none the less felt the paralyzing pressure of 
the shrinking metallic shroud that was closing around industry. 

The increased yield of the Russian gold-iields in 184G gave 
some relief, and served as a parachute to the fall in prices, 
which might otherwise have resulted in a great catastrophe. 
But the enormous supplies of gold from California and Australia 
were all needed to give substantial and adequate relief. Great 
as these supplies were, their influence m raising iDrices was mod- 
erated and soon entirely arrested by the increasing populations 
and commerce Avhich followed them. In the twenty-five years 
betv.'een 1850 and 1876 the money stock of the world was 
more than doul)led, and yet, at no time during this period was 
the general level of prices raised more than 18 per cent, above 
the general level in 1848, A comi^arison of this effect of an 
increasing volume of money after 1848 with the effect of a de- 
creasing volume between 18r)9 and 1848 strikingly illustrates 
how largely different in degree is the influence upon prices of 
an increasing or decreasing volume of money. The decrease 
of the yield of the mines since about 18*)5, while population 
and commerce have l)een advancing, has already produced un- 
mistakable symptoms of the same general distrust, non-employ- 
ment of labor, and political and social disgust which have char- 
acterized all former periods of shrinking money," 

"It is in a volume of money keeping even pace with ad- 
vancing population and connnerce, and in the resulting steadi- 
ness of prices, that the wholesome nutriment of a healthy 
vitality is to be found. The highest moral, intellectual, and 
material development of nations is promoted by the use of 
money unchanging in its value. Tliat kind of money, instead 
of being the oppressor, is one of the great instrumentalities of 
connnerce and industry. It is as profitless as idle machinery 
when it is idle; differing from all other agencies, it cannot 
benefit its owner except when he parts with it. It is only un- 
der steady prices that the jiroduction of wealth can reach its 
permanent maximum, and that its equitalfle distriluition is pos- 
sible. Steadiness in prices insures labor to all and exacts labor 
from all. It gives security to credit and stability and prosperi- 
ty to business. It encourages large entcrj^rises, requiring time 
for their development, and crowns with success well matured 
and carefully executed plans. It discourages purely speculative 
ventures, and especially those based upon disaster. It encour- 



PRICE AND ITS DEPENDENCE UPON CUEEENCY. 37 

ages actual transactions rather tlian gamliling on future prices. 
It metes out justice to both debtor and creditor, and secures 
credit to those who deserve it. It prevents capital from op- 
pressing labor and labor from oppressing capital, and secures 
to each the just share of the fruits of industry and enterprise. 
It secures a reasonable interest for its use to the lenders of 
money, and a just share in the profits of production to the bor- 
rower. It keeps up the distinction between a mortgage and a 
deed. It insures a moderate competence to the many rather 
than colossal fortunes to the few at the expense of the many." 

It may be impossible to devise any system through which 
the volume of money shall always increase or decrease in cor- 
responding ratio to the increase or decrease of all those things 
to measure which is its function. If it be admitted that the 
volume of money should increase in proportion with either 
wealth, commerce, or population, the least measure of increase 
would be that based on population, as in commercial countries 
both wealth and exchanges are multiplied more rapidly than 
population. The narrower measure of increase would probably 
be the more accurate one, as the thing to be measured and 
which it is important should have an unvarying value is human 
effort, and as that can neither be increased nor diminished ex- 
cept through an increase or diminution of the j)opulation, it 
would seem that the volume of money should only vary with 
population. 

As steadiness in prices, which depends on steadiness in 
the relation between money and all other things, is essential to 
prosperity, it follows that in any change in money-systems the 
volume of the new money, that is to say, the number of units 
of the new money issued, should if possible be neither greater 
nor less than the number of units in circulation at the time of 
the change. A strict observance of this rule, whatever may be 
the material of money, will prevent any general rise or fall in 
prices. 

The quantity of metallic money, or of paper money con- 
stantly convertible into metallic money, which can be main- 



3!^ PHILOSOPHY OF PRICE. 

tained in circulation of any particular countiy (-annot be con- 
trolled arbitrarily. It cannot be greater than such an amount 
as may be requisite to maintain the prices of such country at a 
substantial parity with the prices of all other countries using 
the same kind of money. Any change from this amount must 
be temporary, and will be soon automatically corrected by the 
course of exchange. 

The volume of inconvertible paper money, on the contrary, 
is local to, and subject to the control of, the country issuing it, 
and should be regulated solely with reference to existing prices, 
and consequent!}" should be neither increased nor diminished, 
except in correspondence with changes in population and com- 
merce. 

The rates of interest for money are not lowered by increas- 
ing its quantity. It is prices, and not interest, which depend 
upon the volume of money. The rates for the use of 
loanable capital depend upon entirely different factors — such 
as the current rates of business proiits, productiveness of the 
soil, the security of property, the stability of government, pres- 
sure of taxation, and the fiscal policies of governments such 
as the maintenance of public debts, which necessarily increase 
the rate of interest. In truth, increasing the amount of money 
tends indirectly to increase the rate of interest by stimulating 
business activity, while decreasing the amount of money 
reduces the rate of interest by checking enterprises and thereby 
curtaihng the demand for loans. This is signally illustrated 
by the present condition of things in every part of the commer- 
cial world. The rate of interest should be, and under a correct 
money system would be, merely an expression of the rate 
of profit which could be made through the use of borrowed 
capital. 

While the volume of money is decreasing, even although 
very slowly, the value of each unit of money is increasing 
in corresponding ratio, and property is falling in jjrice. Those 



PPJOE AND ITS DEPENDENCE UPON CUEEENCY. od 

who have contracted to pay money iind that it is constantly 
becoming more difficult to meet their engagements. The 
margins of securities melt rapidly away, and the confiscation 
by the creditor of the property on which they are based becomes 
only a question of time. All productive enterprises are dis- 
couraged and stagnate because the cost of producing commodi- 
ties to-day will not be covered by the prices obtained for them 
to-morrow. Exchanges become sluggish, because those who 
have money will not jjart with it for either property or services, 
beyond the requirements of actual current necessities, for the 
obvious reason that money alone is increasing in value, while 
everything else is declining in price. This results in the with- 
drawal of money from the channels of circulation, and its 
deposit in great hoards. This hoarding of money, from the 
nature of things must continue and increase, not only until the 
shrinkage of its volume has actually ceased, but until capitalists 
are entirely satisfied that money lying idle on special deposit 
will no longer afford them revenue, and that the lowest level 
of prices has been reached. It is this hoarding of money, when 
its volume shrinks, which causes a fall in prices greater than 
M'"ould be caused by the direct effect of a decrease in the stock 
of money. Money in shrinking volume becomes the para- 
mount object of commerce instead of its beneficent instrument. 
Instead of mobilizing industry, it poisons and dries up its hfe- 
currents. It is the fruitful source of political and social 
disturbance. It foments strife between labor and other forms 
of capital, while itself hidden away in security gorges on both. 
It rewards close-fisted lenders and filches from and bankrupts 
enterprising borrowers. It circulates freely in the stock 
exchange but avoids the labor exchange. It has in all ages been 
the worst enemy with which society has had to contend, while 
its legitimate function is to benefit society. 

The great and still continuing fall in prices in the United 
States has proved most disastrous to nearly every industrial 



40 PHILOSOPHY OF PRICE. 

enterprise. The bitter experience of the last few years has been 
an expensive but most thorough teacher. It has taught capital- 
ists neither to invest in nor loan money on such enterprises, 
and just as thoroughly has it taught business men not to borrow 
for the purpose of inaugurating or prosecuting them. Of the 
few business enterprises now being successfully prosecuted, 
the larger part are based on a monopoly secured either by pat- 
ents or exceptional conditions. The business man has discov- 
ered that the less active and enterprising he is the better he is 
off. The manufacturer avoids loss by damping down furnace- 
fires and slowing down machinery. 

The mining companies would find profit in inactivity, and 
would probably suspend ojDerations, were it not for the great 
loss they would sustain in doing so. Mines can be properly 
opened only through a great outlay of capital, which would be 
practically lost if they were closed down for any considerable 
period of time. The filling up with water, the caving in 
of galleries, tlie crushing in of shafts, the rusting of machinery, 
and the general disarrangement of their interior workings 
would require for their repair a not much less expenditure 
than was necessary for their original opening. Hoping for bet- 
ter times, they therefore struggle on against an adverse current, 
without profit and generally only without loss by reducing their 
miscellaneous expenditures to the lowest possil)le |)oint and 
wages to a starvation level. The miners ascend from the dark 
and gloomy depths of the mine with their scanty pittance, 
called wages, to find in a famishing household a gloom that 
is more profound. 

The stockholders of railroads have suffered a vast shrink- 
age in the value of their property and in the volume of their 
traflic and in rates of transportation, while their debts have 
remained nominally the same but really increasing. In order 
to make their decreased receipts meet the interest on their 
bonds, they are forced to reduce their operating expenses 



PKICE AND ITS DEPENDENCE UPON CUEEENCY. 41 

to the lowest possible point. Their struggles seem to be in 
vain, and unless that system can be changed which is makino- 
each dollar which they owe more valuable, and at the same 
time causing a shrinkage in their business, and which is chain- 
ing labor and all other forms of capital to the chariot-wheels of 
money-capital, they will, one after another, be swallowed by 
the bondliolders. In the end the stockholders will be entirely 
out of the account, and the contest will be between different 
classes of bondholders, if that can be called a contest where 
victory is assured in advance to the liens which have priority. 

Farmers whose lands are not mortgaged, and their employes 
who at least are insured against absolute want, best escape the 
evils of tlie times, but the prices of agricultural products must 
finally decline with the reduction in the number and means of 
the consumers. The tendency of falling prices is to break 
down the vast diversified interests of the country, and to force 
a constantly increasing proportion of the population into 
the one single primitive industry of cultivating the soil. The 
United States, instead of containing a highly commercial 
and manufacturing nation, will, until falling prices are checked, 
become more and more exclusively agricultural and pastoral. 

Securities have already become so impaired through falling 
prices that loanable capital has fled affrighted from the newer 
and more sparsely settled sections of the country and accumu- 
lated in large amounts in the great financial centers where 
securities are more ample. The personal and property securities 
of individuals have generally ceased to be available, except at 
the highest rates of interest, or at ruinously low valuations. 
Money can be borrowed readily only upon such securities as 
bonds which are hased on the unlimited tax-levying power of 
the government, or upon the bonds and stocks of first-class 
trunk-lines of railroad corporations, whose freight and fare rates 
are practically a tax upon the entire population and resources 
of the regions which they traverse and supply. The competition 



42 PHILOSOPHY OF PKICE. 

among capitalists to loan money on tliese more ample securities 
has become very keen, and sncli securities command money at 
iinprecedentedly low rates. These low and lowering rates of inter- 
est, instead of denoting financial strength and industrial prosper- 
ity, are a gauge of mcreasing prostratlo?i. Large accumulations 
of money in financial centers, instead of being caused by 
the overflow of a healthful circulation, or even being proof- of 
a sufticient circulation, are unmistakable evidence of a congested 
condition, caused by a decreasing and insufiicient circulation. 
The readiness with which government bonds bearing a very low 
rate of interest are taken, instead of showing that the credit of 
the government has improved, is melancholy evidence of the 
'proHtrated condition to ivhich industry and trade have heen 
reduced. 

When the money stock is dimini%shing and prices are fall- 
mg, the lender not only receives interest but finds a profit in 
the greatly increased value of the principal, M'hen it is returned 
to him. A loan of money made in 1SU9 if repaid in 1848 
would have been repaid with an addition of 145 per cent, 
in the purchasing power of principal and interest besides 
all the interest paid. Those who have loaned money to this 
government since 1861 have already received nearly or quite 
as much in the increased value of their principal as 
in interest, and all the probabilities are, in respect to the 
four per cent, thirty year national bonds, if they are redeemed 
in gold, that more profit will be made by the augumentation 
in the value of principal than through interest. Indeed, 
the signs of the times are that the bonds of a country possessing 
the unbounded resources and stable institutions of the United 
States, payable in gold at the end of thirty years without any 
interest whatever, would, through the increase of the value of 
that metal, prove a most profitable investment. 

The worst effect, however, economically considered, of 
falling prices, is not upon existing property nor upon debtors^ 



PRICE AND ITS DEPENDENCE UPON CUEKENCY. 43 

evil as it is, but upon laborers wliom it deprives of employment 
and consigns to poverty, and upon societ}^, which it deprives of 
that vast sum of wealth which resides potentially in the vigor- 
ous arms of the idle workman. A shrinking vohime of money 
transfers existing property unjustly, and causes a concentration 
and diminution of wealth. It also impairs the value of existing 
property by eliminating from it that important element of 
value conferred upon it by the skill, energy and care of the 
debtors from whom it is wrested. But it does not destroy any 
existing property, while it does absolutely annihilate all the 
values producible by the labor which it condemns to idleness. 
The estimate is not an extravagant one that there are now in 
the United States four million persons willing to work, but 
who are idle because they cannot obtain employment. This 
vast poverty-stricken army is increasing and will continue to 
increase as long as falling prices shall continue to separate 
money-capital, the fund out of which wages are paid, from 
labor, and to discourage its investment in other forms of 
property. 

Money capital, labor, and other forms of capital are the 
warp and woof of the economical system. Labor, co-operating 
with the forces of nature, is the source of all wealth, and 
to reach the highest degree of efEectiveness it must be classified 
through the aid of capital and su23ported by capital during the 
j)rocess of production and be measured and paid in money, 
each unit of which is a sight-draft on all other forms of j)i'op- 
erty, bearing a value in proportion to the number of such 
drafts. In order tli^t any country may reach the maximum of 
material prosperity, certain conditions are indispensable. All 
its labor, assisted by the most approved machinery and appli- 
ances, must be employed, and the fruits ot industry must 
be justly distributed. These conditions are only possible when 
capital is absolutely protected against violence and free from 
illegitimate and legislative interference, and when the laborer 



44 PHILOSOniY OF PKICE. 

is protected in liis natural right to dispose of his labor in such 
manner as he may prefer. They are utterly imi^ossible when 
the money-stock is shrinking and the money-value of property 
and services is declining. Howsoever great the natural resources 
of a country may be, however genial its climate, fertile its soil, 
ingenious, enterprising and industrious its inhabitants, or free 
its in^itutions, if the volume of money is shrinking and prices 
are falling its inhabitants will be overwhelmed with Ijankruptcy, 
its industries will be paralyzed, and destitution and distress will 
prevail. 

The instinct of self-interest is the mainspring of industrial 
and commercial activity. It is the animating motive alike 
of the capitalist and of the laborer. Without it no labor would 
be jjerformed, nor would capital have an existence. If money- 
capital is withdrawn from productive enterprises, it is from the 
apprehension of loss, and from the same instinct of thrift 
through which it was acquired. It is natural that the money- 
capitalist should exact from labor all he can, in exchange 
for his money, and that the laborer should exact all the money 
he can in exchange for his labor. 

What is known as the conflict between capital and labor 
is not so much a conflict between other forms of capital and 
labor as it is between money and labor. Indeed, the conflict 
between money and other forms of capital is as distinctly 
marked and quite as severe as the conflict between money and 
labor, and in that conflict other forms of capital suffer fully as 
much as labor, the only difference being that they are better able 
to endure losses. Otlier forms of capital must be constantly con- 
verted into money in order to pay wages and to meet other 
demands incident to industrial enterprises. When the stock of 
money is shrinking and prices are falling, this conversion can 
only be made at rates continually growing more unfavorable, 
while at the same time the products of the laborer for whose 
wages sacrifices have been made are also undergoing a shrink 



PKICE AND ITS DEPENDENCE UPON CUERENCY. 45 

iii^ of money-value. Tims loss and sacrifice are encomitered at 
every turn, and the owners of other capital than money shrink 
from the friction of exchange, withdraw from productive 
enterprises, and only exchange as much of their property 
for money as will suffice to meet the necessary expenditures of 
livinff, which are reduced to the most economical level, as it is 
principal and not income that is being consumed. Little more 
labor will be employed under these circumstances than is 
sufficient to support the owners of capital on this parsimonious 
basis, and as a consequence the labor market will be overstocked, 
and the competition between laborers w^ill reduce wages to 
a starvation level. But during this period, when property is 
being sacrificed to meet current necessities, and laborers are 
being remitted to idleness and destitution, money fattens on 
the general disaster. Under any money system whatever, 
labor, money and other forms of capital confront each other as 
opposing forces, each seeking, through a natural instinct, to 
secure as much as possible of the others in exchange. These 
forces, although always operating against, are not necessarily 
inimical to or destructive of each other. On the contrary,. 
under a just money system, they are not even harmful to eacli 
other. The conflict between them is essential to the proper 
adjustment and harmonious working of all parts of the eco- 
nomical machinery. They are the centripetal and centrifugal 
forces of the industrial system. 

The equilibrium of all things is maintained through 
counter-balances. It is out of the action and counteraction of 
antagonistic forces that the harmonies of the universe are 
evolved. But under an unjust money-system which through 
law or accident fails to regulate the quantity of money so as to 
preserve the equilibrium between money and the other factors 
of production, the conflict between money and labor and other 
forms of capital becomes destructive and ruinous. It is in the 
shadow of a shrinking volume of money that disorders, social 



46 PHILOSOPHY OF PKICE. 

and political, gender and fester, that communism organizes, 
that riots threaten and destroy, that labor starves, tliat capital- 
ists conspire and workmen combine, and that the revenues 
of governments are dissipated in the employment of laborers, 
or in the maintenance of increased standing armies to overawe 
them. 

The peaceful conflict which under a just money system is 
continually waged between money-capital and lal:)or, and which 
tends only to secure the rights of each, and is essential to- 
the progress of society, is changed under a shrinking volume of 
money to an unrelenting war, threatening the destruction of 
both. Money, in either shrinking or unduly increasing volume, 
like a dissolving chemical, separates capital from labor. It is 
not against capital, but against the false financial system that 
permits the volume of money to either shrink or unduly 
increase, that the hostility of society should be aroused. Let 
labor and ca])ital be put on equal terms, so that idle capital will 
be as unfruitful as idle labor, and the conflict between 
them will cease to be destructive. 

An unjust money-system produces an unnatural relation 
between labor, capital and money, and the resulting evils can- 
not be remedied by special legislation on particular cases, 
nor by general legislation abridging the natural rights of either. 
Such legislation would be futile and impertinent, destructive 
of that freedom of individual action so essential to progress, 
and subversive of the true interests of all classes of society, and 
would powerfully tend to the overthrow of free institutions. 

The equitable adjustment of the correlative demands of 
capital and labor cannot be made through violence, and is 
utterly impossible through any legal, or other contrivance, 
under any system that permits contraction or undue expansion 
of that great instrument which measures alike the property of 
the capitalist and the labor of the workman. It is only through 
the action and counteraction of the antagonistic forces of capital 



PEICE AND ITS DEPENDENCE UPON CURRENCY. 4:7 

:and labor, antomatically operating under a just money-system, 
that equity and liarmony can be evolved. 

The very same reasons which make capitahsts refuse 
to exchange money, whose command over property is increas- 
ing, for property whose command over money is decreasing, 
also makes them refuse to exchange it for labor for the 
production of property. In a commercial sense industrial 
enterprises are never undertaken nor carried on, except with 
the hope and expectation of gain. This expectation, unless 
under exceptional conditions, falling markets destroy. While 
capitalists for these reasons cannot afford to invest money 
in productive enterprises, still less can anybody afford to borrow 
money for such investments at any rate of interest, however 
low, and but little money is being now borrowed, except 
for purely speculative ventures, or to supply personal and fam- 
ily wants, or to renew old obligations. Money withdrawn from 
circulation and hoarded in consequence of falling prices, 
a,lthough neither paying wages nor serving to exchange the 
fruits of industry, nor performing any of the true functions of 
money, is nevertheless not unproductive. It may not be earn- 
ing interest, but it is enriching its owner through an increase of 
its own value, and that, too, without risk, and at the expense of 
society. If this were not the case, and if money were, while idle, 
losing a little in value instead of gaining, or if it simply held 
its own, it would be constantly diminished to the extent of the 
necessary expenditures of its owners who, under such conditions, 
would be impelled by every instinct of thrift to seek for rev- 
enues through its employment in productive enterprises. The 
peculiar effect of a contraction in the volume of money is 
to give profit to the owners of unemployed money, through the 
appreciation of its relative purchasing power — or rather its 
comparative value with products — by the mere lapse of time. 
It is falling prices that robs labor of employment and precipi- 
tates a conflict between it and money-capital, and it is the 



i8 PHILOSOPHY OF PEICE. 

appreciating effect which a shrinkage in the volume of money 
has on the value of money that renders the contest an unequal 
one, and gives to money-capital the decisive advantage over 
other forms of capital invested in industrial enterprises. Idle 
machinery and industrial appliances of all kinds, instead of 
being productive of profit, are a source of loss. They con- 
stantly deteriorate througli rust and waste. They cannot 
escape the assessor and tax-gatherer, as the bulk of money does,, 
and must pay extra insurance when idle. 

Labor, unlike money, cannot be hoarded. The day's labor 
unperformed is so much capital lost forever to the laborer, and 
to society. It being his only capital, his only means of exist- 
ence, the laborer cannot wait on better times for better wages. 
Absolute necessity forces him to dispose of it on any terms 
which the owners of money dictate. 

These are the conditions which sui round the laborer 
throughout the commercial world to-day. The labor of 
the past is enslaving the labor of the present. At least 
that portion of the labor of the past which has been crys- 
tallized into money is enabled through a shrinkage of its 
volume and while lying idle in the hands of its owners to in- 
crease its command over present labor and over all forms of 
property and to transform vast numbers of honest and industri- 
ous workmen into tramjDS and beggars. These laborers must 
make their wants conform to their diminished earnings. They 
must content themselves with such things as are absolutely es- 
sential to their existence. Consumption is therefore constantly 
shrinking toward such limits as urgent necessity requires. Pro- 
duction, which must be confined to the limits indicated by 
consumption, is constantly tending towards its minimum, 
whereas its appliances, built up under more favorable condi- 
tions, are sutficient to supply the maximum of consump- 
tion. Thus idle labor, idle money, idle machinery, and idle 
capital stand facing each other, and tlie stagnation spreads 



PRICE AND ITS DEPENDENCE UPON CUKKENCY. 49 

wider and wider. The future affords no hope or pros- 
pect of improvement, except through a change in financial 
policies. 

Prices have been persistentlv falling throughout the world 
since 18Y3, and as fast and as far in specie-paying countries as 
elsewhere. If the policy of chaining the industry and com- 
merce of the world to a single metal be persisted in by the 
United States, Germany, and other European countries acting 
in concert with them, money must still rise in value, and prices 
must continue to fall. The depression in productive industry 
will become more deathly, and the number of idle laborers will 
indefinitely multiply. 

The loss which this country sustains by i^ason of the en- 
forced idleness of four millions of persons who, although idle, 
must still in some scanty way be supplied with food, clothing, 
and shelter, is in the aggregate very great. If it be estimated 
at one dollar per day for each laborer it would amount in two 
years to a sum sufficient to discharge the national debt. It 
would pay the interest, at five per cent per .annum, on $1,800,- 
000,000. It would be a sum more than sufficent to supply 
anew each year the circulating medium of the country. It 
would amount, in four years, to a greater sum than the world's 
■entire gold product has amounted to in the last fifty prolific 
years. It would aggregate in ten years a value far greater than 
the value of the world's entire product of both gold and silver 
for the last hundred years. It would amount in four years to 
a sum more than sufficient to duplicate and stock every mile of 
Tailroad now in the United States. 

Contrasted with the startling sum thns annually lost 
through the shrinkage of money and falling prices, the amount 
which conld, by any possibility be lost in a generation through 
fluctuations in the relative values of gold, silver, and paper, 
would weigh as mere dust in the balance. If to this loss be 
added that caused by the non-employment of productive ma- 



5<J PHILOSOPHY OF PRICE. 

oliinery and appliances, tlie aggregate Ijeconies appalling.. 
The average stocks of nearly all commodities are at no 
time sufficient for more than a few months' consumi)tion. 
Without constant reproduction mankind would soon be strip- 
ped of all their movable possessions. No more fatal Ijlow, tbere- 
fore, could be directed against the economical machinerv of 
civilized life than one against labor ; and that blow can be most 
effectively delivered through a policy which strikes down prices. 
If all debts in this country had been doubled by an act of leg- 
islation, it would have been a far less calamity to the debtor 
and to the country than the increase in the real burden already 
caused by a contraction in the volume of money. And 
infinitely more (disastrous in every sense than an unjust increase 
in the burden of debt is the universal stagnation of industry 
and commerce resultino; from the same cause. The doubliiiii' 
of debts would have left the productive forces unimpaired, 
while falling prices are sapping them insidiously and fatally. 
Nations have often exhibited an astonishing capacity for sus- 
taining and repairing the destruction of great and protracted 
wars. The explanation of this will be found in the fact that 
their productive forces have at such times continued vigorous 
and active. Armies in barracks and on parade are as essen- 
tially non-producers as when actively engaged, and a consid- 
erable proportion of the additions made to armies in times of 
war are recruited from the ranks of non-producers. England 
was never more prosperous than during the Napoleonic wars. 
The Northern and AVestcrn states of the Union were nev'er 
more prosperous than during the civil \var, and for some time 
afterward. So long as all the productive forces are active 
almost any burden can be borne. The debts of the country, 
great as they are, would scarcely weigh as a feather if all its 
labor were employed. Indeed, this country could better afford, 
in an economical view, to support one million soldiers in the 
field, than to support its present army of four millions that 



PRICE AND ITS DEPENDENCEUPOK CURRENCY. 51 

falling prices have conscripted into the ranks of non-producers. 

At this point I purpose to let authority empliasize what 

is taught by experience, and make liberal quotations from the 

soundest thinkers upon this subject, from authors, writers, 

statesmen, and scholars, to the end that their testimony may 

substantiate the position taken in this chapter. I have no 

apology to offer for their number or length except an earnest 

desire to make clear the proposition, that price depends upon 

the volume of currency. The earliest in point of time is 

the following, from David Hume's Essay on money : 

"It is certain that since the discovery of the mines in 
America industry has increased in all the nations of Europe. 
* * We find that in every kingdom into which money be- 
gins to flow in greater abundance than formerly, everthing 
takes a new face ; labor and industry gain life ; the merchant 
becomes more enterprising, the manufacturer more diligent 
and skillful, and even the farmer follows his plow with greater 
alacrity and attention. * * * Jt is of no manner of conse- 
quence with regard to the domestic happiness of a state whether 
money be in a greater or less quantity. The good policy of 
the magistrate consists only in keeping it, if possible, still increas- 
ing ; because by that means he keeps alive a spirit of industry in 
the nation and increases the stock of labor, in which consists all 
real power and riches. A nation whose money decreases is 
actually at that time weaker and more miserable than another 
nation which possesses no more money, but is on the increasing 
hand." 

"William H. Crawford, Secretary of the Treasury, in a re- 
port (February 12, 1820) to Congress, says : 

> "All intelligent writers on currency agree that when it is 
decreasing in amount, poverty and misery must prevail." 

Mr. E. M. T. Hunter, in a report (1852) to the United 

States Senate, says : 

"Of all the great effects produced upon human society by 
the discovery of America, there were probably none so marked 
as those brought about by the great influx of the precious metals 
from the New World to the Old. European industry had 
been declining under the decreasing stock of the precious 
metals, and an ai:)preciating standard of values; human inge- 



52 PHILOSOPHY OF PRICE. 

niiity grew dull under the paralyzing influences of declining 
profits, and capital absorbed nearly all that should have been 
divided between it and labor. But an increase in the precious 
metals, in such quantity as to check this tendency, operated as a 
new motive-power to the machinery of commerce. Produc- 
tion was stimulated l)y finding the advantages of a change in 
the standard on its side. Instead of being repressed by having 
to pay more than it had stipulated for the use of capital, it was 
stimulated by paying less. Capital, too, was benefited, for new 
demands were created for it by the new uses which a general 
movement in industrial pursuits had developed ; so that if it lost a 
little by a change in the standard, it gained much more in the 
greater demand for its use, M'hich added to its capacity for re- 
production, and to its real value." 

The Encyclopedia Britannica, 1859, (article Precious 

Metals, by J. E. McCulloch,) says : 

"A fall in the value of the precious metals, caused by the 
greater facility of their production, or by the discovery of new 
sources of supply, depends in no degree on the theories of 
philosophers, or the decisions of statesmen or legislators, but 
is the result of circumstances beyond human control ; and al- 
though, like a fall of rain after a long course of dry weather, 
it may be prejudicial to certain classes, it is beneficial to an in- 
comparably greater number, including all who are engaged in 
industrial pursuits, and is, speaking generally, of great public 
or national advantage." 

Ernest Seyd, 1868, (Bullion, page 613,) says: 

"Upon this one point all authorities on the subject are 
agreed, to-wit, that the large increase in the supply of gold has 
given a universal impetus to trade, commerce, and industry, 
and to general social development and progress." 

The American Review (1876) says : 

"Diminishing money and falling prices are not only op- 
pressive upon debtors, of whom, in modern times, states are the 
greatest, but they cause stagnation in business, reduced produc- 
tion, and enforced idleness. Falling markets annihilate profits, 
and as it is only the expectation of gain which stiumlates the 
investment of capital in operations, inadequate employment is 
found for labor, and those who are emj^loyed can only be so 
upon the condition of diminished Avages. An increasing 
amount of money, and consequently augmenting prices, are at- 
tended l)y results precisely the contrary. Production is stimu- 



PRICE AND ITS DEPENDENCE UPON CUERENCY. 53^ 

lated by the profits resulting from advancing jDrices ; labor is 
consequently in demand and better paid, and the general ac- 
tivity and buoyancy insure to capital a wider demand and 
higher remuneration." 

Leon Fauchet, (1843,) in Researches upon Gold and Sil- 
ver, says : 

"If all the nations of Europe adopted the system of Great 
Britain, the price of gold would be raised beyond measure, and 
we should see produced in Europe a result lamentable enough." 

Before a French monetary convention in 1869 testimony 
was given by the late M. Wolowski, by Baron Eothschild, and 
by M. Rouland, governor of the Bank of France. 

M. "Wolowski said : 

"The sum total of the precious metals is reckoned at fifty 
milliards, one-half gold and one-half silver. If, by a stroke of 
the pen, they suppress one of these metals in the monetary 
service, they double the demand for the other metal, to the ruin 
of all debtors." 

Baron Rothschild said : 

"The siumltaneous employment of the two precious metal§ 
is satisfactory and gives rise to no complaint. Whether gold 
or silver dominates for the time being, it is always true that 
the two metals concur together in forming the monetary circu- 
lation of the world,- and it is the general mass of the two 
metals combined which serves as the measure of the value of 
things. The suppression of silver would amount to a veritable 
destruction of values without any compensation." 

At the session (October 30, 1873) of the Belgian Monetary 

Commission, Professor Laveleye said : 

"Debtors, and among them the state, have the right to pay 
in gold or silver, and this right cannot be taken away without 
disturbing the relation of debtors and creditors, to the preju- 
dice of debtors, to the extent of perhaps one-half, certainly 
of one-third. To increase all debts at a blow, (brusquement), 
is a measure so violent, so revolutionary, that I cannot believe 
that the government will propose it, or that the Chambers will 
vote it." 

The contrast presented by these authorities between the 

effects of an increasing and decreasing volume of money, shows 



54 PHILOSOPHY OF PRICE. 

that if a change in the one direction or the other is unavoida- 
ble, a change in the direction of an increase is the most desira- 
ble. Because the enlargement of commercial exchanges which 
results from an increase of money speedily restores the equilib- 
rium, the real danger of an unduly increasing money is 
theoretical and fanciful. The trouble which practically threat- 
ens the world and which has been the most prolific cause of 
all the social, political, and industrial ills which have afflicted it, 
is that of a decreasing and deficient amount of money. It is 
from such a deficiency that mankind are now suffering, and is 
the actual and present evil with which we are now confronted. 

I quote further : 

Adam Smith, the father of political economy, says, page 
205: 

"From the high or low money price either of goods in gen- 
eral, or of corn in particular, we can infer only that the mines 
which at that time happened to supply the commercial world 
with gold and silver were fertile or barren." 

"Any rise in the money price of goods which proceeded 
altogether from the degradation of the value of silver, would 
affect all sorts of goods equally, and raise their price universally 
a third, or a fourth, or a fifth ])art higher, according as silver 
happened to lose a tliird, or a fourth, or a fifth part of its former 
value." 

John Stuart Mill, in Principles of Political Economy, says, 

page 301 : 

"The proposition which we have laid down respecting the 
dependence of general prices upon the quantity of money in 
circulation, must be understood as applying only to a state of 
things in Avliich money, that is gold or silver, is the exclusive 
instrument of exchange, and actually passes from hand to hand 
at every purchase, credit in any of its shapes being unknown. 
When credit comes into play as a means of pnrchasing, distinct 
from money in hand, we shall hereafter find that the connec- 
tion between prices and the amount of the circulating medium 
is much less direct and intimate, and that such connection as 
does exist, no longer admits of so simple a mode of expression. 
But on a subject so full of complexity as that of currency and 
prices, it is necessary to lay the foundation of our theory in a 



PKICE AND ITS DEPENDENCE UPON CURRENCY. 55- 

tliorougli understanding of the most simple cases, wliicli we 
shall always find lying as a gronndwork or substratum under 
those which arise in practice. That an increase of the quantity 
of money raises prices, and a diminution lowers them, is the 
most elementary proposition in the theory of currency, and 
without it we should have no key to any other." 

Again he says : 

"If the whole money in circulation was doubled, 'jprices 
would double. If it was only increased one-fourth, j^Wcip^f would 
rise one-fourth. The very same effect would be produced on 
prices if we supj^ose the goods (the uses for money) diminished 
instead of the money increased ; and the contrary effect if 
the goods were increased or the money diminished. So that 
the value of money — all other things remaining the same- — 
varies in/versely as its quantity ; every increase in quantity 
lowering its value, and every diminution raising it in a ratio 
exactly equivalent." 

Kicardo plainly says in regard to this question : 

"That commodities w^ould 7'ise and fall in price in pro- 
portion to the increase or diminution of money, I assume as a 
fact that is incontrovertible. That such would be the case, the 
most celebrated writers on political economy are agreed. * * 
The value of money does not wholly depend upon its absolute 
quantity, but on its quantity relative to the payments it has to 
accomplish ; and the same effect would follow either of two 
causes — from increasing the tises for money one-tenth, or from 
diminishing its quantity one-tenth ; for, in either case, its value 
would rise one-tenth." 

William Stanley Jevons, Professor of Political Economy 

and Logic in Owen University, England, says : 

"I cannot but agree with Mr. Macculoch, that putting out 
of sight indimdmal cases of hardship, if such exist, a fall in the 
value of gold (increasing the quantity of money) must have, 
and, as I should say, has already, a most powerful beneficial 
effect. It loosens the country from the old bonds of debt and 
habit, as nothing else could. It throws increased rewards he- 
fore all who are maMng and acquiring %oealth, somewhat at 
the expense of those who are enjoying acquired wealth. It 
excites the active and skillful classes of the community to new 
exertions, and is, to some extent, like a discharge of his debts 
is to the bankrupt and insolvent long struggling against his. 



56 PHILOSOPHY OF PRICE. 

burdens. All this is effected without the break of national 
good faith which nothing could compensate." 

The Professor proves by methods too lengthy to quote 
here, that the money already (in 1862) issued from the gold 
and silver mines of California and Australia had in effect re- 
duced the burden of tlie debt of England 40 per cent, by in- 
creasing the price of labor and all forms of wealth. 

He further says (Money and the Mechanism of Exchange, 

page 338) : 

"Considerable changes, it is true, are taking place in the 
mode of conducting business in some parts of the Continent. 
Professor Cliffe Leslie, who is well known to be intimately ac- 
quainted with the economical systems of the continental coun- 
tries, attributes the rise of prices in Germany in a great degree 
to the quicker circulation of the money, and the freer use of in- 
struments of credit. In the Fortnightly Revieiv for November, 
1870 (pages 568-9), he says: 'The improvements in locomotion 
and in commercial activity which have so largely augmented 
the money-making power of the Germans, have also quickened 
prodigiously the circulation of money, and the development 
of credit, likewise following industrial progress, has added to 
the volume of the circulating medium a mass of substitutes for 
money which move with greater velocity. A much smaller 
amount of money than formerly now suffices to do a given 
amount of business, or to raise prices to a given range, and to 
the increased amount of actual money now current in Germany 
we must add a brisk circulation of instruments of credit. 
"Were the circulating medium composed of coin alone, what- 
ever the amount of the precious metals issuing from the mines, 
or circulating in other countries, and whatever the price of 
German connnodities in markets abroad, no rise in the price of 
Gerhian commodities could take place without additional coin 
to sustain it.'" 

Page 335 : 

"To decide how much money is needed by a nation, we 
must, firstly, determine the quantity of work which maney has 
to do. This will l>e pro])ortional. Uteris 2><irihus^ to the num- 
ber of the population. Twice the number of i)eople, if ecpially 
active in trade and performing it in the same way, will clearly 
M'ant twice as much money. It will be proportional, again, to 
the activity of industry, and to the complexity of its organiza- 



PEICE AiN'D ITS DEPENDENCE UPON CUKEENCY 57. 

tion. The more goods are bought and sold, and the more often 
they pass from hand to hand, the more currency will be needed 
to move them. It will be proportional, again, to the price of 
goods, and if gold falls in valne and prices are raised, more 
money wdll be needed to pay the debts increased in nominal 
amonnt." 

Prof. Francis Way land, in his work, "Elements of Political 

Economy," which is taught in our schools and colleges, page 

296, says : 

"The opening of new and richer mines, or the use of 
improved means for extracting the metals, may cheapen 
money. The value of money, like that of any other com- 
modity, is also affected in short poriods by fluctuations of sup- 
ply and demand." 

Page 297: 

"If there is more money in a country than is needed 
for its exchanges, the price of goods is raise^l and it is sent 
abroad for new purchases. If there is a scarcity of money in 
a country, the price of goods declines, and money comes in from 
other hands to be exchanged for them." 

Page 298 : 

"So if one million of dollars serves all the purposes of 
exchange in a city, to double the amount of money will bring 
no benefit. If it is a city isolated from the rest of the world, 
such an increase will merely double prices, that is, twice as 
much money will be used in every exchange." 

"If money is abundant because business is stagnant and 
exchanges are few, it is a sign of adversity rather than of pros- 
perity. If a- scarcity of money is caused by an increase of 
products and great activity of trade, it indicates a prosperous 
condition. In countries containing rich mines of the precious 
metals, money, or the material for money, becomes a product of 
regular industry, and its abundance is a favorable sign." 

Prof. Francis Bowen in his work, "American Political 

Economy," page 280, says : 

"The power of money thus to determine its own amount 
arises from the recriprocal action of the quantity of money in 
active circulation and the price of commodities. All exchange, 
as I have said, is a barter of merchandise for money ; and the 
quantity of money which an article of merchandise will com- 
mand in the market is termed its price. Increase that quantity, , 



58 PHILOSOPHY 0I<' PRICE. 

and the price of all articles inevitably rises ; diminish it, and 
tlio price as certainly falls. The whole process of exchange 
may be compared to the operation of weighing a well-poised 
balance ; the money and the merchandise being placed on the 
opposite arms of the lever, increase the weight on the money 
side and the merchandise is sure to rise. We can easily see, 
therefore, why the amount of currency for the whole world 
distributes itself, by its own laws, among all nations, in exact 
proportion to their respective wants. If by any means one 
nation should obtain a larger portion than belongs to it by the 
regular course of trade, all articles of merchandise belonging 
to that nation must rise in price ; they must be exchanged for 
a larger quantity of money. Articles of foreign growth and 
manufacture would be irresistibly attracted thither by ^his 
alteration of values. A single article might possibly be ex- 
cluded by prohibitory legislation. But no arljiti-ary enactments 
can so clip the M'ings of commerce as to prevent it from seeking 
a market in a country where the price of all conmiodities has 
I'isen above their average value all the world over. Foreign 
goods must necessarily be imported in such a case, whether by 
open trading or by smuggling; and, being imported, they 
must be paid for. Money is the only redundant article in 
such a community, the only one which can l)e oifered in pay- 
ment, for all other goods are, by the hypothesis, of a higher 
price with them than in any otlier country, and cannot be sent 
abroad but at a sacrilice. Money then Avould be exported in 
spite of all coast guards, and the currency would thus be 
reduced to its natural level." 

Page 281 : 

''In the other case, if the curl-ency of any nation should 
fall below the av'erage proportion to its wants, the price of 
all merchandise there would fall, they being exchanged against 
a smaller amount of money." 

"The erpialization of money is but another name for 
the equalization of prices." 

Prof. Thompson, Political Economy, while not exactly in 
accord with this theory as a whole, quotes from many eminent 
authors as follows : 

Page 22 : 

"Mr. Picardo (following Say and Torrens) also elaborated 
the theory of international exchanges; in connection with the 



PEICE AND ITS DEPENDENCE UPON CUKKENCY. 59 

notion tliat money is a purely passive instrument of exclianges, 
changing its pnrcliasing power according to the amount of it 
that a country possesses. From this it was an easy infer- 
ence that a drain of money from a country would either have 
no effect, or would correct itself by so increasing the pur- 
chasing power of money in comparison with commodities, as to 
make the country a bad place to sell in, but a good place to 
buy in." 

Page 149 : 

"On the principles generally accepted by the English 
school, and first enunciated by David Hume in 1'752, the rate of 
decrease in value should have been exactly proportional to the 
increase in amount. He says that 'the only influence which 
a greater abundance of coin has in the kingdom' is 'by 
heightening the price of commodities and obliging every one 
to pay a greater number of these little yellow or white pieces 
for everything he purchases.' He admits indeed a temjporciTy 
effect of quite another kind. 'In every kingdom into which 
money begins to flow in greater abundance than formerly, 
everything takes a new face ; labor and industry gain life, the 
merchant becomes more enterprising, the manufacturer more 
diligent and "skillful, and the farmer follows his plow with 
greater alacrity and attention." 

Page 150, quotes J. S. Mill : 

"H the whole money in circulation was doubled, prices 
would be doubled ; if it was only increased one-fourth, prices 
would rise one-fourth." 

Page 208, quotes Thomas Tooke : 

"Hence new uses will be found for it when it is abundant, 
new avenues of commerce will be opened, new branches of 
industries will be essayed, until^ increased production finds 
employment for the increase of money. If money has increased, 
industry and trade are increased ; and thus the tendency to 
depreciation is met and strongly counteracted." 

Page 208 : 

"The drain of precious metals from a country, though its 
effects are alleviated by the creation of the credit-fund for 
domestic payments, is therefore decidedly injurious to its gen- 
eral interests. It is not exactly true to say, as has too often been 
said over and over again, since Turgot first said it, that 
money is a commodity like any other. That proposition is untrue, 



CO PHILOSOPHY OF PRICE. 

except as it regards the metal of which money is made, but in so 
far as it is the means of exchange, it has pecuharities of its own, 
w^hich clearly distinguish it from other commodities. If iron 
and cotton are scarce, those who need them suffer by the 
scarcity, but it has no effect upon the prices of other materials. 
If, on the other hand, money is scarce, the price of everything 
else is affected. Every one must make exchanges, must buy and 
sell ; if, therefore, there is a tendency to a deficiency or a 
scarcity of the means of exchange, everyone is straitened, and 
all transactions become difficult. Just as M'hen the water falls 
in its rivers, traffic is interrupted because the vessels are 
aground, so, when money is diminished or disappears from the 
channels of circulation, articles pass from one owner to another 
with great difficulty. We have got to the point of dispensing, 
in the commercial transactions of advanced countries, with a 
great quantity of money by replacing with credit in all its forms ; 
but, given the quantity of money that is still necessary, its 
rarity produces an embarrassment, and sometimes even a general 
crisis." 

Professor Perry says : 

"The fact that such a medium is in universal circulation, 
and that the holders are ready and willing to exchange it 
against any 'sort of service adopted to gratify their desires, ex- 
ercises a kind of creative power, and Ijrings a thousand produc- 
tions to market which would otherwise never have come into 
existence. Since money will buy anything, men are on the 
alert to bring forward something which will l)uy money ; and 
since money is divisible into small pieces, an incredible num- 
ber and variety of small services are brought forward to be ex- 
changed against these pieces, which service we have no reason 
to suppose woidd ever l)e brought forward at all, were it not 
for the strong attraction of money. Moneyis a form of capi- 
tal lohich stimulates and facilitates all the processes of pro- 
ductioi^ without excepjtion. 

Professor Chevalier, of France, than whom no greater 

authority on money has ever lived, in speaking of the increase 

of money, says : 

"Such a change will benefit those who live l)y current la- 
bor and enterprise ; it will injure those who live upon the fruits 
of past labor. In tliis repsect it will work in the same direction 
with most of the developments which are brought about by 
that great law of cizilization to which we give the noble name 



WHAT IT IS AND HOW ESTABLISHED. 61 

of progress. * * * It has been wisely said that there is no 
machine which economizes labor like money, and its adoption 
ha.": been likened to the discovery of letters." 

In his work (1831) on the so-called precious metals, herein- 
before quoted from, Mr. Jacob says : 

"The following sheets owe their composition to the friend- 
ship with which, during more than twenty-five years, I had 
the honor of the late Mr. Huskisson (Member of Parliament). 
* * * I had made some progress in the collection of facts 
from the sacred and profane writers of antiquity, when the 
dreadful accident occurred by which his country and the world 
were deprived of the services of that eminent and estimable 
man. * * * It will readily be believed that his jpenetrat- 
ing and assiduous habits would lead him to accurate views of 
the influence of the precious metals on the industry of man- 
kind. He saw that an increase in the piT)duction of the mines 
might act as a stimulus to excite industry, invention, and 
energy (consider the march of civilization since the issue of 
money by the mines of California and Australia, and the issue of 
pape • money during the war of the rebellion) ; while a decline 
in their produce might have a contrary tendency. He looked 
with attention to other consequences which might arise from 
the failure or defalcation of the mines, and considered the 
-effect of gold and silver (of money) on the production of 
wealth to be of less importance than the influence it would ex- 
ercise in the distribution of it, in the complex situation of the 
several classes of which modern society in Europe is com- 
posed." 

Francis A. Walker, of Yale College, Professor of Political 

Economy and History, says : 

"Perhaps we shall get a better view of this subject by 
confining ourselves to the claims made in favor of a progress- 
ive increase of the money. It does not need to be said that 
Mr. Hume had in view an increase of money 7iot so great as to 
bewilder the producer and the trader through a fiercely rapid 
rise in prices, or to render sober business calculations impos- 
sible. * * * The public indebtedness of the civilized 
world to-day probably stands between twenty-five and thirty 
thousand millions of dollars of American money. The volume 
of private debts, including the capitalized value of fixed 
charges — loans, annuities, etc., — is vastly greater. 

"linearly the whole of this x'Asi body of obligations is pay- 



C2 PHIL0)«<1PIIY OF PRICE. 

able, principal and interest, in money. The question whether 
tlie supply of money shall hicrea^ie or de<2rcase is, then, the 
question whether the hur(hn of these more or less permanent 
charges shall be dlniinished or enhanced. It is the fact of a 
large body of indebtedness (some hundreds of' thousands of 
millions) which gives its chief importance to the current pro- 
duction of the pi ecious metals. * * * That gold or silver 
should be yielded in exactly the amount, from time to time, 
from generation to generation, which will serve to keep the 
'value of money uniform, is not to be expected. We are not to 
expect, therefore, that the value of money will remain constant 
through any long period. One of the two parties to long con- 
tracts (no matter how short they are, provided they are 
renewed instead of being paid, and public debts, as M'ell as 
those of merchants, generally speaking, grow larger and larger) 
will, in all probability, lose, while the other will gain by the 
change in values. The losses thus sustained may be slight, or 
they may be serious and even ruinous. * * * Certainly, 
I think, no one could refuse to admit that, if it were an issue 
between having the pressure of the whole body of indebted- 
ness dhninisJied by natural causes, or increased, the former re- 
sult Avould be preferable. If it were a question of sacri-ficlny 
the Present to the Past, or the Past to the Present, all would 
agree in saying. Let the dead hury its dead.'''' 

"The weight of opinion among economical writers of rep- 
utation seems to be in the affirmative. Mr. J. R. McCulloch, 
the English economist, has perhaps taken the strongest grounds 
in favor of the desirableness of a gradual reduction in the bur- 
den of debts, through the natural increase in the volume of the 
precious metals. * * '^' It promotes industry, and di- 
minishes the weight of ohli.gations which j^^^ess upon the pro- 
ducing classes, whether employer or employed!''' 

Mr. Horton, after advocating the gradual increase of 

money, says: 

"I know the danger of giving the support of science to 
that spirit. On the other hand, I have conlidence in truth 
and in the honesty and acuteness of my countrymen ; and I 
think the safe course for the advocates of sound currency is to 
grasp this mettle firmly. The truth will bear to be seen ; the 
greatest danger is in misrepresenting it." 

Kegarding the observation of Professor Horton, Professor 

"Walker says : 



■WHAT IT IS AND HOW ESTABLISHED. 63 

"On tliis point Mr. Horton's remark seems to me thor- 
oughly just and manly." 

Such are the opinions of men who occupy the world's 
honored seats of learning, and who are familiar with every 
page of the history of mankind, and are profoundly acquainted 
with all the facts and principles which have been established 
by the last three thousand years of man's experience. 

Prof. A. L. Perry, Political Economy, page 6Q, says : 
"Price is indeed only a case under the class values, but 
practically it becomes a very important thing in Political 
Economy, because the value of almost all exchangeable things 
is determined through price. So far as commodities, personal 
services, and claims are exchanged against each other directly, 
without the intervention of money or the use of the denomi- 
nations of money price plays no part though value does, but 
these cases are few and insignificant as compared with the 
whole. It is hardly necessary to add, that price, though rela- 
tive, is specific and not general, and consequently that there 
may be a general rise or fall of prices. If the money of a 
country becomes relatively more abundant than before, general 
prices will rise in that country for reasons already made appar- 
ent ; and when money becomes less abundant prices will fall 
for corresponding reasons." 

Mason and Lailor, Primer of Political Economy, page 50 : 
"One thing may rise in value, but in order that it may do 
so, other things (Prop, twenty-six) must fall. If money rises 
in value, it will take less of it to buy other commodities. 
Therefore, general j)rices will fall. If money falls in value, it 
will take more of it to buy other commoditiea. Therefore, 
general prices will rise. If tea has been selling for ninety cts., 
coffee for thirty, and sugar for twenty-two and one-half, a 
pound, and a scanty supply (Prop, six) forces their prices up 
to one dollar, eighty, sixty, and forty-five cents, a pound, the 
value of money so far as they are concerned will have fallen. 
A dollar will not exchange for as much of them as it used to. 
There has been a general rise of their prices, but there has been 
neither rise nor fall in their values, compared with each other. 
For a pound of tea, before the rise in price, would have bought 
three pounds of coffee or four of sugar, and it will buy pre- 
cisely the same amount now. Therefore, there may be a gen- 
eral rise or fall in prices." 



64 PHILOSOPHY OF PRICE. 

Prof. Sjrae, Industrial Science, page 151 : 

"The price of money, or the rate of interest, does not 
depend on its quantity, as even Mill acknowledges, although 
somewhat inconsistently, as I consider, for wliy should not the 
price of money be regulated in the same manner as the price 
of any other commodity ? Money is subject to the same fluctu- 
ations as ordinary commodities, and its price oftglit to be regu- 
lated in the same way, namely, by demand ; and demand, again, is 
influenced, as in the case of ordinary commodities, by proflts. 
If profits are small, the demand will be small, and the rate of 
interest will be low ; if jorofits are large the demand will be 
large, and the rate of interest will he high. Money in the 
United States is more plentiful than it is in England (as proved 
by the higher prices of commodities and wages in the former 
than in the latter country), and it is more plentiful in Aus- 
tralia than it is in the United States." 

Linderman, in his Money and Legal Tender, page 118 

says : 

"If a nation may not dej^art from its metallic money 
standard, except as a last resort for its own preservation, it 
surely should not undertake to return too rapidly to the metallic 
standard, especially when there has l)een a wide departure 
from it. Years of frugality on the part of the people, as well 
as a wise and economical administration of public affairs, are 
necessary to bring a country from a depreciated paper money 
to the metallic standard previously existing, however great 
may be its natural resources. This is shown in the United 
States, where a credit-money standard, which has prevailed 
since eighteen hundred and sixty-two (18G2), has not yet been 
bro,ught to a parity with the metallic standard." 

Fawcett, in Handbook of Finance, pages 146 to 148, says : 

"The decline of prices since 1872-3 is explained by the 
increased value of gold. The first effect was to cause a collapse 
in 'speculative securities' viz : bonds of railroads, etc., which 
were based on the expectations of a continuance of high prices 
for commodities, or in other words, a low value for gold. The 
losses which followed caused panic and a decrease in manufactur- 
ing industry and improvement enterprises. This diminished em- 
ployment for labor and necessarily decreased the consumptive 
demand for all commodities. Theorists have been jangling for 
three years al)out the cause of the reaction which began in 
1872-8, and the decline of prices which has continued almost 



PEICE AND ITS DEPENDENCE UPON CUEEENCY. 65 

witlioiit inteiTiiption since. These causes are, however, not 
obscure. The progress of the physical sciences and of labor- 
saving inventions has nndoubtedly had an important tendency 
to reduce the prices of nearly all manufactured articles and, to 
a small extent also, the value of raw materials. But the in- 
creased burden of debt, the increase of traffic (thus requiring a 
larger volume of the circulating medium), and the demonetiza- 
tion of silver, have all contributed to increase the value of 
gold beyond its equitable value as a measure for values of com- 
modities. The era of golden debt, like the era of gold, has- 
had its culmination, and the causes at work are now preparing 
the way for some new era in financial aifairs which will, in all 
probability, be as unique as either of the two which have pre- 
ceded it. 'No man can yet foresee what it is to be. It is, how- 
ever, not difficult to distinguish a few tendencies, that must 
operate toward the new development. The first of these is the 
decline in the rates of interest for money in order to reduce the 
burden of funded and mortgage debt everywhere. This will 
be accomplished partly by the repudiation and complete loss 
of a very large portion of the existing volume of funded debts, 
and partly by the concentration of capital (seeking safety rather 
than high rates of interest) on a smaller amount of the debt. 
Another tendency that must continue, is the necessity for sup- 
plementing the stock of gold in the world with the stock of 
silver, and a universal recognition of both metals as money at 
about the same relative values they maintained prior to the era 
of gold. Until these things are accomplished, "prices" will 
continue to decline, and the commercial world will be in dis- 
tress." 

Sir. E. Sulleran, in his work. Protection to Kative Indus- 
try, page 7, says : 

"Nearly twenty years have elapsed since the discovery of 
gold in California and Australia, ^nd the spread of steam com- 
munication by land and sea over the whole face of the globe, in- 
creased to an inconceivable extent the trade of the world, and 
equalized tlie trading conditions of the different nations of 
the globe and peoj)le that inhabit it. Every nation, every in- 
dustry, received an influence and enormously increased its com- 
mercial forces." 

A modern writer says : 

"That contraction of the currency (the money of a com- 
munity) must contract values and derange industry, is a prop- 



66 



PHILOSOPHY OF PRICE. 



osition as simple and as true as that two added to two will 
make four; that, so long, therefore, as contraction shall con- 
tinue, shrinkage must progress and enterprise halt, because no 
one can buy anything under a continuing contraction without 
certain loss on any purchase. With an increase of money, a 
material rise in all values is not invariable. It may be that'tlie 
increase will give rise to new enterprises, which give employ- 
ment to the idle, so that legitimate demand for money may 
keep pace with the increase, and relatively the demand and 
supply may continue on a par." 

The following extract from Alison's History of Europe 

shows that this ruinous policy of contraction has obtained in 

other countries besides our own, and that the effect was then as 

now to fill the coffers of the rich money-lenders at the expense 

of all other classes : 

"The evils complained of arose from the unavoidable re- 
sult of a stationary currency, co-existing with a rapid increase 
in the numbers and transactions of mankind, and these were 
only aggravated by every addition made to the energies and 
productive powers of society. * * * But if an increase in 
the numbers and industry of men co-exists with a diminution 
in the circulating medium by which their transactions are car- 
ried on, the most serious evils await society, and the M'hole re- 
lations of its different classes to each other will be speedily 
changed ; and it is in that state of things that the saying proves 
true, that "the rich are every day growing richer and the poor 
poorer." 

Henry C. Care}^, one of our soundest thinkers, says in his 

work. Harmony of Interests, page 186 : 

"The introduction of a third commodity, itself liable to 
variation in the supply, as in the case with money, tends to 
produce additional variations in the quantity of one commodity 
that must be given for another. Thus, if the sujiply of money 
be large among one set of wheat raisei's, and small among an- 
other, the raiser of sugar will sell in the first, and buy in the 
last, obtainin"^ much money from the one and giving little to 
the other. W ere all arrangements for the production, purchase, 
or sale of commodities or pro])erty executed on the instant, 
this cause of disturbance would scarcely exist, because the 
prices of all M-ould be similarly affected, being high when 
money was })lenty and low when it was scarce, and the quan- 



PRICE AND ITS DEPENDENCE UPON CURRENCY. 67 

tity of sugar to be given for wheat or Avlieat for sugar, would 
depend upon the size of the crops ahnost as completely as if no 
intermediate commodity were used. Such, however, is not the 
case. The merchant buys coffee in January, and contracts to 
deliver its equivalent in money in July, at which time money 
may be so scarce that six pounds of coffee will command no more 
than would have been done in January by four pounds. The 
merchant commences to build a ship in July, when money is 
scarce, and the price of labor is low, and he finishes it when 
money is plenty and wages are high, and it costs him ten, fif- 
teen, or twenty per cent, more than he had calculated upon. 
The little trader, on the contrary, who buys and sell from 
day to day, loses nothing. If he hiijs high, he sells 
high, and if prices are low to buy, he makes them low 
to sell, and the measure of his business is the measure of 
his profits. The great suffers by such variations are those the 
nature of whose property, or the character of whose business, 
requires them to make arrangements far ahead, and to take the 
risks incident to changes in the currency for the whole period 
that elapses between the commencement and the conclusion of 
an undertaking. Such are all the persons the ]3roducts of 
whose labor are not intended for immediate consumption, 
the owners of houses, farms, factories, furnaces, railroads — all, 
in fact, connected with the improvement of land. In a time 
of pressure for money in one place, flour, cotton, cloth, and 
other articles intended for daily consumption, may be trans- 
ferred to other places where money is ])lenty, and the changes 
in their prices are therefore small when com23ared with those 
which are experienced by the possessors of property that can- 
not be transferred, and are therefore obliged to bear the whole 
burden of the change. In such cases land becomes entirely 
unsalable except at an enormous reduction of price, to which 
its owners must submit if they are placed in a position to ren- 
der sales necessary ; and thus it is that so many persons con- 
nected with land and its improvement are ruined by revulsions 
that affect but in a small degree the operations of the retail 
grocer. Such, likewise, is the case with labor. The man who 
has a family and finds no demand for his labor cannot change 
his locality. He and his family must suffer together. Food 
may be at a low onoriey-jTrioe, but if he can obtain no employment, 
the labor-price is so high he cannot purchase it. Land and la- 
bor, then, are especially interested in the maintenance of uni- 
formity in the standard by which the products of both are 



68 PHILOSOPHY OF PRICE. 

measured, because tliey are tlie great sufferers by the changes 
which occur in the ]3rogress of time." 

W. G. Sumner, American Currency, page 329 : 

"We have seen that prices alone govern tlie flow of the 
precious metals, or, more strictly stated, that the movement of 
the metals and the prices of commodities in different countries 
act and react upon one another in such a Avay as to keep up the 
exact natural relation of prices between different countries, and 
give to each country in the world's market its full relative ad- 
vantage in production. If, therefore, a nation has a specie cur- 
rency, a drain upon nt by an adverse balance of trade, a foreign 
payment, or any other similar cause, would immediately pro- 
duce a lowering of prices and a return of current specie until 
the natural level was once more restored." 

Nothing more certain than this. Henry Clay, during the 
debates on the sub-treasury in 1840, made the following elo- 
quent, truthful and logical speech. It shows clearly that his 
great mind had grasped the idea, that price, not only of 
products, but of labor, depended upon the quantity of money 
ill circulation: 

"The proposed substitution of an exclusive metallic cur- 
rency to the mixed medium with which we have been so long 
familiar, is forbidden by the principles of eternal justice. As- 
suming the currency of the country to consist of two-thirds of 
paper and one of specie; and assuming, also, that the money of 
a country, whatever may be its component parts, regulates all 
values, and expresses the true amount which the debtor has to 
pay his creditor, the effect of the change upon that relation, 
and upon the property of the country, would be most ruinous. 
All property would be reduced in value to one-third of its pres- 
ent nominal amount, and every debtor would, in effect, have to 
pay three times as much as he had contracted for. The pres- 
sure of our foreign debt would be three times as great as it is. 
while the six hundred millions, which is about the sum now 
]u-obably due to the banks from the people, would be multi- 
plied into eighteen hundred millions! * * * Have 
gentlemen reflected upon the consequences of their system or 
de])letion? I have already stated that the countiy is borne 
down by a weight of debt. If tlie currency be greatly dimin 
islied, as beyond all example it has been, how is tliis debt to be 
extinguished? Property, the resource on which the debtor re- 



PEICE AND ITS DEPENDENCE UPON CUREENCY. 69 

lied for liis payment, will decline in value, and it may happen 
that a man, who honestly contracted debt, on the faith of prop- 
erty which had a valne at the time fully adequate to warrant 
the debt, will find himself stripped of all his property, and his 
debt remain unextinguished. The gentleman from Pennsylva- 
nia (Mr. Buchanan) has put the case of two nations, in one of 
which the amount of its currency shall be double what it is in 
the other, and, as he contends, the prices of all property will 
be double in the former nation of what they are in the latter. 
If this be true of two nations, it must be equally true of one, 
whose circulating medium is at one period double what it is at 
another. ]^ow, as the friends of the bill argue, we have been, 
and yet are in this inflated state; our currency has been double, 
or, in something like that proportion, of wliat was necessary, 
:and we must come down to the lowest standard. Do they not 
perceive that inevitable ruin to thousands must be the inevita- 
ble consequence ? A man, for example, owning j)roperty to 
the value of five thousand dollars, contracts a debt for five 
thousand dollars. By the reduction of one-half of the currency 
of the country, his property in effect becomes reduced to the 
value of two thousand five hundred dollars. But his debt un- 
dergoes no corresponding reduction. He gives up all his prop- 
erty, and remains still in debt two thousand five hundred dol- 
lars. Thus this measure will operate on the debtor class of the 
nation, always the weaker class, and that which, for that rea- 
son, most needs the protection of government. 

But if the effect of this hard-money policy upon the debtor 
class be injurious, it is still more disastrous, if possible, on the 
laboring classes. Enterprise will be checked or stopped, em- 
ployment will become difiicult, and the poorer classes w411 be 
subject to the greatest privations and distresses. Heretofore it 
has been one of the pretensions and boasts of the dominant 
party, that they sought to elevate the poor by depriving the 
rich of undue advantages. ISTow" their policy is, to reduce the 
wages of labor, and this is openly avowed; and it is argued by 
them, that it is necessary to reduce the wages of American la- 
bor to the low standard of European labor, in order to enable 
the American manufacturer to enter into a successful competi- 
tion with the European manufacturer in the sale of their re- 
spective fabrics. Thus is this dominant party perpetually 
changing; one day cajoling the poor, and fulminating against 
the rich, and the next, cajoling the rich, and fulminating 
against the poor. It was but yesterday that we heard that all 
v^ho were trading on borrowed capital, ought to break. It was 



70 PHILOSOPHY OF PRICE. 

but yesterday we heard denounced the long-established policy 
of the country, by which, it was alleged, the poor were made 
poorer, and the rich were made richer. 

Mr. President, of all the subjects of national policy, not one 
ought to be touched with so mucli delicacy as that of the wages, 
in other ^vords, the bread, of the poor man. In dwelling, as I 
have often done, with inexpressible satisfaction upon the many 
advantages of our country, there is not one that has given me 
more delight than the high price of manual labor. There is 
not one whicli indicates more clearly the prosperity of the mass 
of the community. In all the features of human society, there 
are none, I think, which more decisively display the general 
welfare, than 2i permanent high rate of wages, and aj^ermanent 
high rate of interest. Of course, I do not mean those exces- 
sively high rates, of temporary existence, which result from 
sudden and unexpected demands for labor or capital, and whicli 
may, and generally do, evince some unnatural and extraordina- 
ry state of things; but I mean a settled, steady and durable high 
rate of wages of labor, and interest upon money. Such a state 
demonstrates activity and profits in all the departments of busi- 
ness. It proves that the employer can aiford to give high 
wages to the Ia])orer, in consequence of the profits of his Ijusi- 
ness, and the borrower high interest to the lender, in conse- 
quence of the gain which he makes by the use of capital. On 
the contrary, in countries where business is dull and languish- 
ing, and all the walks of society are full, the small profits that 
are made will not justify high interest or high wages." 

In another speech later upon tlie same subject he spoke as 

follows: 

'"And what is the remedy to be provided for this most un- 
liappy state of the coimti-y ? I have conversed freely with the 
members of the Philadelphia committee. They are real, prac- 
tical, working men — intelligent, well-ac(piainted with the gen- 
eral condition, and with the sufl:"e rings of their particular com- 
munity. No one, who has not a heart of steel, can listen to 
them, without feeling the deepest sympathy for the privations 
and suflierings unnecessarily brought upon the laboring classes. 
Both the committee and the memorial declare that their reli- 
ance is, exclusively, on the legislative l)ranch of the govern- 
ment. Mr. President, it is with subdued feeMngs of the pro- 
foundest hnmilityaiid mortification that I am compelled to say 
that, coiistitnted as Con<!;ress now is, no relief will be afforded 



PRICE AND ITS DEPENDENCE UPON CUKKENCY. 71 

by it, unless its members shall be enlightened and instructed by 
the people themselves. A large portion of the body, whatever 
may be their private judgment upon the course of the presi- 
dent, believe it to be their duty, at all events safest for them- 
selves, to sustain him, without regard to the consequences of 
his measures upon the public interests. And nothing but clear, 
decided, and unequivocal demonstrations of the popular disap- 
probation of what has been done, will divert them from their 
jjresent purpose. 

But there is another quarter which possesses sufficient 
power and influence to relieve the public distresses. In twen- 
ty-four hours the executive branch could adopt a measure which 
would afford an efficacious and substantial remedy, and re- 
establish confidence. And those who, in this chamber, support 
the administration, could not render a better service than to re- 
pair to the executive mansion, and, placing before the chief 
magistrate the naked and undisguised truth, prevail upon him 
to retrace his steps and abandon his fatal experiment. No one, 
sir, can perform that duty with more propriety than yourself. 
You can, if you will, induce him to change his course. To you, 
then, sir, in no unfriendly spirit, but with feelings softened 
and subdued by the deep distress which pervades every class of 
our countrymen, I make the appeal. By your official and per- 
sonal relations with the president, you maintain with him an 
intercourse which I neither enjoy nor covet. Go to him and 
tell him, without exaggeration, but in the language of truth 
and sincerity, the actual condition of his bleeding country. Tell 
him it is nearly ruined and undone, by the measures which he 
has been induced to put in operation. Tell him that his exper- 
iment is operating on the nation like the philosopher's experi- 
ment upon a convulsed animal in an exhausted receiver, and 
that it must expire in agony, if he does not pause, give it free 
and sound circulation, and sufEer the energies of the people to 
be revived and restored. Tell him that, in a single city, more 
than sixty bankruptcies, involving a loss of upward of fifteen 
millions of dollars, have occurred. Tell him of the alarming 
decline in the value of all property, of the depreciation of all 
the products of industry, of the stagnation in every branch of 
business, and of the close of numerous manufacturing estab- 
lishments, which, a few short months ago, were in active and 
flourishing operation. Depict to him, if you can find language 
to portray, the heart-rending wretchedness of thousands of the 
Avorking-classes cast out of employment. Tell him of the tears 
of helpless Mddows, no longer able to earn their bread; and of 



72 PHILOSOPHY OF PRICE. 

iiiiclad and unfed orplians, who have been driven, by his poli- 
cy, out of the busy pursuits in which but yesterday they were 
gaining an lionest livelihood." 

Was eloquence ever more logical ? Could language poi'tray 
our present situation more completely? This whole magniti- 
cent plea was for more currency. That through this medium 
the distress in the land might disappear and bring relief to the 
toiling millions. 

Henry C. Carey, in his treatise on Wealth: 

"The money price of labor would have fallen with the 
increased difficulty of procuring the precious metals, but for 
the substitution therefor of credits in the form of drafts, bank 
notes, etc., in most of tlie operations of the world." 

From a speech in Congress on the currency: 

"Undue contraction, on the other hand, is fraught with 
like evil to the same classes. I cannot better illustrate this than 
by quoting from Sir Archibald Alison, in his 'England in 1815 
and 1845; or, a Sufficient and Contracted Currency,' wherein 
he says: 

'The period of a contraction of the currency and conse- 
quent fall in the money prices t)f all the articles of human cori- 
sumption is one in which great profits are sure to be realized 
by the larger capitalists, and great losses sustained by the small- 
er. The former prosper because the magnitude of their trans- 
actions enables them to realize a handsome income upon the 
whole from a declining and at length almost inconceivably 
small amount of profit from each transaction; and they gradu- 
ally get the monopoly of the market in their own line of busi- 
ness by the extinction of the lesser capitalists whom the fall in 
the price of commodities has ruined, or the diminished profits 
have repelled from entering into competition with them. 
* * * Small traders, therefore, and farmers without 
capital are speedily ruined in such a state of tilings, and tlie 
laboring or destitute condition is only rendered the more dis- 
tressing l)y the contrast which it affords to the wealth and s[)len- 
dor with which the holders of large capital in the same line of 
business are surrounded. * * * A period of contract- 
ed currency is one of embarrassment, difficulty, and generally, 
in tlie end, of insolvency to the small farmer and moderate 
land-holder. 

* * * If a supply proportioned to the increase 



PEICE AND ITS DEPENDENCE UPON CUEKENCY, 73 

of men and tlie wants of their commercial intercourse is not 
afforded, the circulating medium will become scarce; it will 
rise in price from that scarcity, and become accessible only to 
the ]nore rich and affluent classes. The industrious poor or 
those engaged in business but possessed of small capital will be 
the first to suffer." 

• The following short extract from Doubleday's Fina^icial 
History of England will give an idea of some of the conse- 
quences of that act of folly: 

"As the memorable 1st of May, 1823, drew near, the coun- 
try bankers as well as the bank of England, naturally prepared 
themselves, by a gradual narrowing of their circulation, for the 
dreaded hour of gold and silver payments 'on demand,' and 
the withdrawal of the small notes. We have already seen the 
fall in prices produced by this universal narrowing of the pa- 
per circulation. The effects of the distress produ'ced all over 
the country, the consequence of this fall, we have yet to see. 

TJie^ distress^ ruin and hanhruptcy which now took place 
were universal, affecting both the great interests of land amd 
trade; but among the landlords whose estates were burdened 
by mortgages, jointures, settlements, legacies, etc., the effects 
were most marked and out of the ordinary course. In hun- 
dreds of cases, from the tremendous reduction in the price of 
land which now took place, the estates barely sold for as much 
as would pay off the mortgages; and hence the owners were 
stripped of all and made beggars. I was myself personally ac- 
quainted with one of the victims of this terrible measure. ' He 
was a school-fellow, and inherited a good fortune, made princi- 
pally in the West Indies. On coming of age and settling with 
his guardians, he found himself possessed of fully £40,000; 
and with this he resolved to purchase an estate, to marry, and 
settle for life. He was a young man addicted to no vice, of a 
fair understanding and most excellent heart, and was connected 
with friends high in rank and likely to afford him every proper 
assistance and advice. The estate was purchased, I beheve, 
about the year 1812 or 1813, for £80,000, one moiety of the 
purchase money being borrowed on mortgage of the land 
bought. In 1822-23 he was compelled to part with the estate 
in order to pay off his mortgage and some arrears of interest; 
and when this was done he was left without a shilling, the es- 
tate bringing only half of its cost in 1812 ! Thus, without im- 
prudence or fault of any kind, was this amiable man, together 
with his family, plunged in irretrievable and inevitable ruin, 



74 PHILOSOPHY OF PRICE. 

by the act of a legislature which ought to have protected both, 
and which was fully warned of the consequences of what it was 
about to do; but which, in requital, chose to laugh those v;ho 
warned to utter scorn. My readers must not suppose that this 
was either an exaggerated or uncommon case. On the contra- 
ry, the country teemed with similar examples, and on the com- 
mencement of the session of 1S23 the tables of both houses 
were loaded w^ith petitions, detailing scenes of hardship and 
destitution appalling in the extreme." 

That great man, the astronomer Copernicus, whose amaz- 
ing genius penetrated and discovered a truth that all the ages 
and millions of men who had gone before him failed to per- 
ceive or to comprehend — the proper movements of the planets 
of the solar system — in his treatise '•''Monete Cudende Ratio^'' 
addressed to the king of Poland in the first part of the 16th 
century, said : 

"ISTumberless as are the evils by which kingdoms, princi- 
palities and republics are wont to decline, these four are, in my 
judgment, most baleful: civil strife, pestilence, sterility of the 
soil, and corruption of the coin. The first three are so mani- 
fest that no one fails to apprehend them; hut the fourth ^vjhich 
concerns money ^ is considered h(/feii\ and those the most refiec- 
tive^ since it is not hy a hloiv, hut llttU hy little^ and through a 
secret and obscure aj)j)roach, that it destroys the State.''^ 

Mr. William Jacob, F. E.. S., of England, in his profound 
examination into the quantity of money in use by man at vari- 
ous periods of history, states the quantity probably in use at 
the time of the Roman Augustus, and gives a table showing 
its decrease from that time forward — through the exhaustion of 
the gold and silver mines known to man prior to the discovery 
of tlie American continent. I can only spare space for a part 
of his table. I begin with the time of Augustus, and close 
with that of the Saxon heptarchy, giving a few intervening 
sums to show the rate of diminution : 



A. D. 


£358,000,000 


About $1790,000,000 


230, 


181,943,000 


" 9(19,000,000 


410, 


107,435,924 


" 537,000,000 



PRICE AND ITS DEPENDENCE UPON CURRENCY. 75 

662, 51,324,889 " 256,000,000 
806, 33,674,256 " 168,000,000 

Mr. Jacobs says : 

"If we take a view of Europe during the existence of the 
Saxon heptarchy in England, we shall probably find the scarci- 
ty of money and the depression of prices to have reached 
their lowest point. The Romans, in abandoning Britain, Gaul, 
and the other western portions of the dominions over which 
their power had once extended, had carried with them all that 
was portable and valuable. We select a few facts to show how 
very small must have been the quantity of the money at that 
period in Britain, and how very low was the metallic valuation 
of every description of property." 

I can only give room to the following quotation of prices 

made by Mr. Jacob : 

Price of a slave or man, 

" horse, 

" mule, or ass, 

" ' ox, 

" cow, 

" swine, 

" sheep, 

" goat, 

And such was the power of the Wobles over the money- 
less people, many of whom were held in slavery, while others 
were reduced to a condition of servitude little, if any, prefera- 
ble to actual slavery, that the price of a hawk or a greyhound 
was the same as that of a man, and the robbing of a hawk's 
nest was as great a crime in the eye of the law, as was the mur- 
der of a human being. 

ISTumerous laws prohibited the farmers from weeding and 
hoeing, so that the young partridges should not be disturbed; 
steeping seeds lest it should harm the game, and manuring with 
night soil for fear of injuring the flavor of the partridges. 

Regarding this, and a later period of time. Sir Archibald 
Allison, in his history of Europe, says : 

^^The two greatest events in the history of mankind have 



£ 


s. 


d. 


2 


16 


3 


1 


15 


2 





14 


1 





7 


2 





6 


2 





1 


10 





1 


2 








4 



76 PHILOSOPHY OF PRICE, 

been hroxigld ahout hy a successive contraction and expansion 
in the circulating mediinn of society. The fall of the Roman 
Empii-e, so long ascribed in ignorance to slavery, to heathen- 
ism, and moral corrujDtion, was in reality brought about by a 
decline in the silver and gold mines of Spain and Greece. 
. . , . And as if Providence had intended to reveal in the 
clearest manner possible the influence of this miglity agent on 
human affairs, the resurrection of mankind from the ruin this 
cause had produced was owing to the directly opposite set of 
agencies being put in operation. Columbus led the way in the 
career of renovation; when he spread his sails across the Atlan- 
tic, he bore mankind and its fortunes in his bark. . . . The 
annual supply of the p>recious metals — of money— for the use 
of the globe was tripled; before a century had elapsed the 
price o^ every species of produce was qiiad.rupled. The loeight 
of debt and taxation insensibly wore off under the influence 
of that prodigious increase; in the renovation of industry the 
relations of society loei^e changed., the weight of feudalistn cast 
off, the rights of man estahlished. Among the many concur- 
ring causes which conspired to bring about this mighty con- 
summation, the most important, though hitherto the least ob- 
served, was the discovery of Mexico and Peru" — (their gold 
and silver mines). 

Bryant, in his work on Money, says : 

^'- Any reduction in the price which the producer or the art- 
isan is ahle to obtain for his labor., or the product of his Icdjor, 
is an inju7'y., misfortune and loss to every single member of 
society., excepting solely those who live upon the interest of 
loaned money. If the reduction is temporary, then the loss is 
temporary; if it is permanent, then the loss is permanent." 

Albert Gallatin, ex-Secretary of the United States Treas- 
ury, in his work on Money, published in 1831, says: 

"It is well known that the discovery of America was fol- 
lowed by a great and permanent fall in the price of the pre- 
cious metals, which reduced it to one-fourth of their previous 
relative value to all other commodities." 

Humboldt says that the gold and silver money in circula- 
tion in the eighteenth century is — at the time he wrote — thirty 
times greater than in the fifteenth centur}-, and that its value 
or purchasing power was only one-twelfth of M'hat it then was 



PKICE AND ITS DEPENDENCE UPON CURKENCY. YT 

^ — that is, 8 1-3 cents would then buy as much as 100 would at 
the time he wrote. 

Professor Bonamy Price says that the purchasing power 
of the so-called precious metals has fallen fourteen times since 
the reign of the Henrys — that is, T 1-7 cents would then buy 
as much as 100 will now. 

The Boston Daily Advertiser of March 11, 1875, says : 

"The prime element in determining the value of money, 
whether gold or paper, is quantity, and it is subject to the same 
laws as other commodities. Increase the quantity, it will buy 
less. In other words, it produces a rise in prices, but no in- 
crease in values." 

Dr. Soetbeer, the great German authority, says : 

"The value of money has fallen through the issue of pa- 
per money, as well as through the increased productions of 
gold and silver." 

Judge John Barnard Byles, one of England's greatest ju- 
rists, in his work. Popular Political Economy, page 154, says : 

"Men talk glibly of variations in the currency. Few re- 
flect on the awful extent to which such changes aft'ect the pros- 
perity of all ranks. The laborer, the pauper, and the beggar 
are as much interested in the currency question as the manu- 
facturer, the shopkeeper, or the great proprietor of land or 
funds, and even more. 

Sudden and great alterations in the amount of value of 
the circulating medium are at best transfers of property — gi- 
gantic robberies ; they are often much worse ; they involve 
wanton destruction of immense property, and stopj^age of in- 
dustry. 

The cure provided by the Act of 1844, for an adverse bal- 
ance of trade, and for every export, or tendency to an export 
of the precious metals, is a sudden and gi-eat diminution in the 
quantity of the currency — a rise in its value — next, a great and 
sudden rise in the rate of interest ^a fall in the price of all 
things — a fearful injury to all the industrious classes. 

What you expected always eventually happened; the bal- 
ance of trade brought the bullion back. The issue of notes 
was then, in easier times, contracted to its safe and ordinary 
amount. You passed through the crisis with little or no altera- 
tion in the value of money, or rate of interest. When the 



78 PHILOSOPHY of price. 

bullion went away, notes, by supplying its place, broke the 
shock to credit ; when l)ul]ion returned, the withdrawal of 
those notes still preserved the equilibrium. The paper portion 
of the currency, over and above its other advantages, was then 
an ingenious contrivance in the nature of a spring or elastic 
band, which, enabling you safely to expand the currency in 
times of distress, and to contract it again in times of prosperi- 
ty thus equalized and averaged the tension. Lord Ashburton 
has shown how the currency often w^as relaxed in periods of 
severe pressure with perfect safety. And this occasional relax- 
ation in times of difficulty Avas the ordinary course of proceed- 
ing long before the Bank Restriction Act. Its advantage was 
well understood even as early as the beginning of the last cen- 
tury. Addison, writing in the time of Queen Anne, says: 
'When the bullion leaves us, we make credit supply its place.' 
There was in the paper currency a union of convertibility with 
elasticity. There was a compensatory and self-adjusting action 
which artificially secured uniformity of value, and made a 
mixed currency, partly metallic, partly paper, a much better 
and more invariable standard of value than a mere metallic cur- 
rency could possibly have been. 

You can now no longer rely on an average favorable bal- 
ance of trade; there may not only be (as there will certainly 
be) periodical drains of the precious metals, but there may be 
a perennial stream running out, not as formerly less than the 
perennial stream running in, but much larger. 

How is it now proposed to meet the drain when the mis- 
ery begins to be felt ? 

Not as before, by supplying the void with notes. That is 
no longer consistent with the preservation of a metallic basis 
to the currency; for we are told, and truly told, that if new 
notes were issued as fast as gold went out, the drain of gold 
would be continually going on, till all the gold had left the 
kingdom, the banknote would be inconvertible, and another 
bank restriction act would be inevitable. 

No, it is to be stopped violently by a diminution in the 
quantity, and consequent rise in the value, of the Avhole cur- 
rency, just as if it were entii ely metallic. No notes are to be 
issued in place of the gold that goes out. Nay, the law may 
even contract the notes as the gold goes out. Prices of every- 
thing arc to fall. The industrious classes are to see their prop- 
erty thus taken from them, and their debts and incumbrances 
thus really augmented. Industry is to be paralyzed, trade 
stopped, and the pressure of the public burthens indefinitely 



PRICE AND ITS DEPENDENCE UPON CUKEENCY. 79 

: aggravated; wliile the transactions of the empire are being 
dwarfed and stnnted to iit a short allowance of the circulating 
niedimn of the civilized world. 

Then it is said prices will be effectually beaten down, and 
so at length imports will be checked, exports promoted, and an 
adverse balance of trade nattirally redressed. Never mind, 
though thi§ desirable and necessary result should be produced 
by the diminution or cessation of the ordinary operations of 
industry and commerce, and the bankruptcy of otherwise sol- 
vent houses. 

It will be seen at a glance how insignificant the affffreo-ate 
amount of coin and notes is, compared with the aggregate 
amount of bankers' checks, bills of exchange, and money of 
account. 

But then the quantity and value of these checks, bills and 
money of account, depend entirely on the quantity and value 
of tlie coin and notes. Diminish the quantity of coin and 
notes by five per cent., and you may augment the exchangeable 
value of the residue, even of the coin and notes, by twenty or 
fifty per cent; for when the quantity of money or of any other 
article of first necessity, but of limited supply, is diminished, 
its exchangeable value rises in a much higher degree than the 
degree of diminution. Added to all which there is the effect 
of uncertainty and panic. That, however, is the least part of 
the mischief. Touch the coin and notes, the other and greater 
currency shrinks at once, like the sensitive plant. 

And no one can tell the proportion in which, when you 
•curtail the lesser currency, the greater is actually curtailed; in 
.some instances it may be in a less proportion, but in many in- 
stances a far greater proportion. The enhancement in value of 
the greater currency is the same, but who can tell or conjecture 
what the diminution in quantity is ? 

Lord Ashburton declared that the importations, large as 
they necessarily were, were not more than, under a wiser man- 
.agement of the currency, the country could have easily borne. 
Mr. Mill says: 'The crisis of 1847 was of that sort which the 
provisions of the Act had not the smallest tendency to avert, 
and when the crisis came, the mercantile difficulties were prob- 
ably douhled by its existence.' 

And why was the industry of the country subjected to 
this horrible torture ? That an adverse balance of trade might 
be corrected by what is called the natural flow of the jDrecious 
metals. That a theory might be carried out. In vain did men, 
grown gray in business, remonstrate against the measure three 



80 PHILOSOPHY OF PKICK. 

years before. It was carried in conteinjjtuous defiance of their 
\varnino;s. 

Few subjects are so intricate as tlie distribution of the pre- 
cious inetals among the countries of the workh Many consid- 
erations are overlooked by those Avho prophesy that the evil 
will Avork its om'u cure. David Hume says that a ])rogressive 
increase in the quantity of the precious metals, and their de- 
clining value in any country, is favorable to a progressive in- 
crease" of industry. And no doubt that is so. A stream, there- 
fore, of the precious metals poured into a country, produces 
effects exactly the converse of the effects which its dereliction 
j)roduces in the countiy which it is leaving. This fertilizing 
stream, in the country to which it goes, stimulates industry, 
multiplies transactions, creates its own demand, and counter- 
acts its tendency to return. Our industry is crippled — our 
neighbor's is augmented. We permanently need the bullion 
less — he permanently needs it more." 

The following is from the celebrated report on the high 
price of gold bullion made to the English Parliament in 1810: 

"An increase or diminution in the demand for gold, or 
what comes to the same thing, a diminution or increase in the 
general supply of gold, will, no doubt,, have a material efl'ect 
upon the money prices of all other articles. An increased de- 
mand for gold, and a consequent scarcity of that article, will 
make it more valuable in proportion to all other articles; the 
same quantity of gold will purchase a greater quantity of any 
other article than'it did before; in other words, the real price 
of gold, or the quantity of connnodities given in exchange for 
it, will rise-, and the money prices of all commodities will fall; 
the money price of gold itself will remain unaltered, but the 
prices of all other connnodities will fall. That this is not the 
present state of things is abundantly manifest; the prices of all 
connnodities have risen, and gold appears to have risen in its 
price only in common with them. If this common effect is to 
be ascribed to one and the same cause, that cause can only be 
found in the state of the currency of this country. 

The same rise of the market price of gold above its mint 
l)rice will take place, if the local currency of this particular 
country, being no longer convertible into gold, should at any 
time be issued to excess. That excess cannot be exported to 
other countries, and, not being convertible into specie, it is not 
necessarily returned upon those who issued it; it remains in the 
channel of circulation, and is gradually absorbed by increasing 



PKICB AND ITS DEPENDENCE UPON CUEEENCY. 81 

tlie prices of all commodities. An increase in the quantity of 
the local currency of a particular country, will raise prices in 
that country exactly in the same manner as an increase in 
the general supply of precious metals raises i)rices all over 
the world. By means of the increase of quantity, the value 
of a given portion of that circulating medium, in exchange 
for other commodities, is lowered; in other words, the money 
prices of all other commodities are raised, and that of bul- 
lion with the rest. 

The same amount of paper may at one time be less 
than enough, and at another time more. The quantity of 
currency required will vary in some degree with the extent 
of trade; and the increase of our trade, which has taken 
place since the suspension, must have occasioned some in- 
crease in the quantity of our currency. But the quantity of 
currency bears no fixed proportion to the quantity of com- 
modities ; and any inferences proceeding upon such a suppo- 
sition would be entirely erroneous. The effective currency of 
the country depends upon the quickness of circulation, and the 
number of exchanges performed in a given time, as well as 
upon its numerical amount; and all the circumstances, which 
have a tendency to quicken or to retard the rate of circulation, 
render the same amount of currency more or less adequate to 
the wants of trade. A much smaller amount is required in a 
high state of public credit, than when alarms make individuals 
call in their advances, and provide against accidents by hoard- 
ing ; and in a period of commercial security and private confi- 
dence, than when mutual distrust discourages pecuniary 
arrangements for any distant time." 

The Bight Hon. George I. Goschen, M. P., an eminent 

English financier, in an address delivered before the Bankers' 

Institute, April, 1883, said : 

"If we take the $50,000,000 as the amount required for 
arts and manufactures and for all purposes other than circula- 
tion, and subtract that sum from the $100,000,000 of annual 
supply, it leaves for the purposes of circulation $50,000,000 
only, and on this hypothesis the extraordinary demand of $1,- 
000,000,000 would absorb the available yield. Economists will 
accordingly ask themselves what result, if any, is such a phe- 
nomenon likely to have produced. I think there is scarcely 
an economist but would answer at once : 'It is probable, it is 
almost necessary, it is according to the laws and the principles 



82 PHILOSOPHY OF PRICE. 

of currency, that sucli a plienomenoii must be followed by a 
fall in the prices of commodities generally.' Let us now turn 
to the other side of the question and examine the range of the 
prices of connnodities, and see whether or not it is a fact that 
there has been a great fall. 

For the tigures 1 am about to place before you I am in- 
debted to Mr. Giffin, of the board of trade. I have examined 
the prices of commodities as published by the board of trade, 
but I have also consulted other sources. I have here a classi- 
fication of articles under certain heads showing prices in the 
years 1873 and 1 883 respectively. (Here he gives the table.) I am 
bound to say it appears to me that these figures reveal an ex- 
traordinary state of things. * * * It appears to me that if it 
be true that population continually increases, and that there is 
a certain increase in w^ealth, an additional amount of circulation 
will be necessary in order to meet the increased demand unless 
there are compensating counter economies by the extension of 
the check system and other methods. On the one hand you un- 
doubtedly have increased population. You also have an in- 
crease of wealth. Then again, you require more gold 
for more transactions. Gold has two or three functions 
to perform in circulation. It has to supply what 1 may 
call pocket-money, and it has to liquidate large transac- 
tions between nations and nations, and what is almost an anala- 
gous function, it has to remain in the vaults of bankers on 
deposit against the notes that are issued against it ; still it is more 
simple to treat these two latter functions as one. Such being 
the two functions of gold, if the population increases the nec- 
essary pocket-money must 'increase, and if the transactions 
increase, somewhat more is required lor liquidating the balan- 
ces. 

Let us now consider whether the economies in the use of 
gold (checks and clearings) have been as great as the increase 
in the population and as the increase in the amount of gold re- 
quired to liquidate the balance of transactions. Mr. Giifin, 
in an article printed in the Journal of the Statistical Society 
for March, 1871), expresses the opinion that the United King- 
dom was thoroughly 'well banked' even tAventy years ago, and 
that there have been no new devices invented during the last 
twenty years which have much economized the use of gold in 
the itnited Kingdom. We have already reduced the use of 
gold in this country almost to a minimum, and I am confirmed 
in this view by the statement that the total circulation of gold 



PRICE AND ITS DEPENDENCE UPON CUKKENCY. 83^^ 

in England increased, according to the estimate of the authori- 
ties of the Bank of England, from $515,000,000 to $620,000,- 
000 between 18Y0 and 1880. This would mean, and it is a 
most significant fact, that in this country, which is so ' well 
banked,' $100,000,000 more circulation was nevertheless re- 
quired in 1880 than in 1870. 

As regards England, then, I do not see that there has been any 
economy in the use of gold to counterbalance the increasing 
demand of the population, nor are we aware — those of us who 
have been able to look into the matter — that in France or Ger- 
many, or elsewhere, the economies have been such as to coun- 
terbalance the increasing demand for gold. I am now brought 
to the point that if there is any truth in the theory that the 
amount of circulation stands in a certain relation to the ques- 
tion of price, then this strain upon the gold circulation must 
have produced an effect upon prices. We have to deal with 
the fact, let us look at it how we will, the sovereign goes 
further than it used to go. Happy, then, it is for those who 
have the sovereigns ; on the other hand, unhappy it is for 
those who have commodities left on hand and produce which 

they have not sold. 

* ^f * •» 

Let us now assume that there will be a continuance of low 
j)rices ; that is to say, a continuance of the increased value of 
gold. Two classes would be permanently affected. One is the 
class which is entitled to receive gold. They will be much 
better oif . The class of debtors, on the other hand, who are 
bound to pay a given amount of gold for a long period to come, 
will be much worse off. In the same way, as the rise in prices 
is generally to the advantage of the debtor, so a fall in prices 
will be to his disadvantage. The holders of mortgages would be 
in a distinctly favorable position. While the mortgages would 
run, they will continue at a sum that will be on ilie constant 
increase in its purchasing power. Those who have borrowed 
the sum will be in a worse position by having their means of 
payment constantly diminishing in price. The influence of 
this circumstance on land owners will not be overlooked. 
Land owners who have borrowed money on their estates will 
be under contract to pay a sum which represents more value 
than when the loan was made, while the produce of the land, if 
it should fall in price like other commodities, would not secure 
the same amount of gold. It is impossible to see how farmers 
should be able to continue to. pay the same amount of gold for 



:84 I'HILOSOPHY OF PRICL. 

rent if the prices of Avliat tliey raise from the soil sliould per- 

maiientlv falh 

* * * * 

A distinguished French economist lias said that he was 
not snre whether France would have been bankrupt in 1848 
l)ut for that great increase in ,the production of gold, which 
created a degree of connnercial prosperity which enabled the 
French to escape from their difficulties. I have heard another 
distinguished man suggest that the great difficulties of the old 
Roman Empire with regard to laws that had to be passed for 
the relief of debtors was due to the fact that they never had an 
expansive currency, but that the supply of the precious metals 
was stationary, at least if compared with the increasing transac- 
tions and the increasing population, and that it did not enable 
the Roman men of business to conduct their operations with 
that continuously small increase in the supply of the precious 
metals wdiich are required to meet the increased demands of 
population and increasing wealth." 

Alexander Hamilton, in his report on the Mint in 1Y92, 

said: 

"To annul the use of either of the two metals as money is 
to abridge the quantity of circulating medium, and is liable to 
all the objections which arise from a comparison of the benefits 
of a full with the evils of a scant circulation." 

I make no apology, in view of the importance of the 

question, for giving some quotations I find grouped in a very 

able and comprehensive pamphlet on this subject by Judge 

Robert W. Hughes," of Virginia. He quotes M. Edward 

Cazalet, of Milan, a distirguislied and very able Italian banker, 

who says: , 

"It is computed that the total metallic circulation of the 
world amounts to $T,<H)0,oo(i,()(»(), of which about 3,750,000,- 
000 are gold, and 3,250,000,000 are silver. 

The wliole of this mass of metal is now doing service as 
currency, and to demonetize or eliminate either metal would 
involve a reduction of the circulation by about one-half. The 
half demonetized M'ould be incalculaby depreciated in value ; 
the half mIucIi remained to do double service M'ould be a])pre- 
ciated to an equal extent. Since the value of all articles of com- 
merce is re]iresented by the currency, the value of these articles 



PKICE AND ITS DEPENDENCE UPON CURRENCY. 85 

must fall in proportion to the reduction in tlie volume of the 
currency, otherwise the moneyed currency could not possibly 
do the work which the two metals combined had previously 
performed. Thus, to settle a debt of $100 it would be neces- 
sary to sell merchandise which under the double currency had 
been valued at $200. The creditor would gain at the expense 
of the debtor, * '^ * As the currency of a country is the 
only legal tender which can be offered in payment of a debt, 
the debtor would have to procure that currency from a circu- 
lation which had been suddenly contracted, and in proportion 
to this contraction the debtor would be a loser and the creditor 
a gainer. When the enormous amount of international and 
national as well as personal indebtedness is considered, 
and when we bear in mind that this indebtedness would be well- 
nigh doubled by the demonetization of either gold or silver, it 
becomes clear that such an event would revolutionize the actual 
conditions of society, and be nothing short of a universal ca- 
lamity." (See M. Cazalet's pamphlet on bimetallism, pages 
14, 15.) 

Speaking of a later period, the historian Allison says : 

"If this circulating medium of the globe had remained 
stationary, or declining, as it was from 1815 to 1859, from the 
effects of South American revolution and English legislation, 
the necessary result must have been that it would have become 
altogether inadequate to the wants of man ; and not only would 
industry have been everywhere cramped, but the price 
of produce would have universally and constantly fallen. 
Money would every day have become more valuable ; all other 
articles measured in money less so ; debt and taxes would have 
been constantly increasing in burden and oppression ; the fate 
which crushed Rome in ancient, and has all but crushed Great 
Britain in modern, times would have beset that of the whole 
family of mankind. All of these evils have been entirely ob- 
viated, and the opposite blessings introduced, by the opening 
of the great reserve treasures of nature in California and Aus- 
tralia. * * * Before half a century has elapsed the prices 
of every article will be tripled, enterprise proportionately en- 
couraged, industry vivified, debts and taxes lessened." 

Sir Archibald wrote before 1873, says the author. 

The author then quotes from a distinguished German 
writer, M. Herr von Barr, who, after showing the direct loss to 
Germany from the depreciation of her silver coin, and the^ 



86 PHILOSOPHY OF PRICE. 

product of her silver mines, which lie places at an enormous 
figure, from the demonetization of silver, says : 

''This direct loss, important as it is, is nothing, however, 
compared with the indirect loss resulting from the fall of 
prices." 

Himself a large land-owner, he first speaks of agriculture : 

"It is cruelly suffering from the reduced value of all pro- 
duce. The farmers are paying their rents irregularly, or not 
at all ; their stock in trade has often to be distrained to recover 
arrears of rent. The land-owners are overwhelmed by mort- 
gages. When at last, in order to extricate themselves, they 
try to sell their estates, they find no purchasers, or have to be 
satisfied with a price one-third below former estimates. The 
discouragement is universal. No more agricultural improve- 
ments are being effected ; employment is, consequently, lack- 
ing ; and there is great indigence. Hence that increasing 
emigration, for \vliich special trains and steamers have to be 
arranged. It is a veritable exodus. What remedy for so 
nmch suffering ? The agriculturists, perceiving at length the 
real cause of the evil, demand the abandonment of the gold 
standard. * * * The fact is strange, yet certain, that from 
this intense crisis has sprun^ that odious and inexplicable re- 
turn to the intolerance of tlie Middle Ages, called the anti- 
semitic movement, the Judenhetze (Jew hatred). The Jews, 
being large holders of the gold, whose power is unduly in- 
creased, are regarded by the populace as enriching themselves 
by the ruin of others. The capitalist, unhurt, even profits by 
the cheapness of enforced sales." 

The awful disaster of 1847, falling like a thunder-clap 
from a clear sky, — for the promise had been that nothing of 
the kind could ever lia})i)en under the patent system adopted 
in 1844, — caused an enormous public commotion and the ap- 
pointment by the House of Lords and the House of Commons 
of a "Secret Committee" to make a solemn investigation into 
the affairs and management of the Bank. From a vast mass 
of testimony taken before this " Secret Committee," I quote 
the following, confining myself to brief extracts taken from 
the testimony of the chief officers of the Bank ; whose ability 
•and 'knowled(je to testify in the matter is heyond the pale of 



PKICE AND ITS DEPENDENCE UPON CURRENCY. 87 

caml or disxmte. The following is a loortion of the testimony 
given by Mr.John II. Palmer, at that time a director, and 
soon after made Governor of the Bank of England : 

^ "It is \>^ xyroducing a fall in the valne of commodities in 
this conntry that you correct the exchanges ? Ans. Yes ; not 
merely m that way, but yon would bring capital into the coun- 
try by a high^ rate of interest. 

It is by interference with trade that it acts, and not merely 
by the mconveniences of the bill-holders? Ans. It causes 
the stoppage of ti-ade. 

What would be the effect upon the manufacturers and la- 
borers of the country during such an operation ? Ans It 
destroys the labor of the country. At the present moment, in 
the neighborhood of London, and in the manufacturing dis- 
tricts, you can hardly move in any direction without hearing 
universal complaint of the want of employment by the labo:? 
ers of the country. 

That you ascribe to the measures it was necessary for the 
Bank to adopt in order to preserve the convertibility (specie 
payment) of its notes? Ans. I think the present depressed 
state of labor is entirely owing to that circumstance. 

And tlie pressure of the Bank produced forced sales? 
Ans. It stops credit, and the British merchant sells his goods 
for the_ purpose of meeting his private payments, and brings 
his capital to the Bank at an earlier period than it would come 
in the ordinary course of business. There is no means of sup- 
plying the Bank with gold, excepting only the diminution of 
tJie bank-notes, which immediately contracts the currency, and 
lowers prices by increasing the value of money." 

The following is a portion of the testimony of James 
Morris and Henry J. Prescott, the Governor and Deputy Gov- 
ernor of the Bank of England, before the " Secret Committee": 
"Is there, in your opinion, any mode by which the ten- 
dency to an elflux of the precious metals, and the consequent 
diminution of the circulating medium, can be arrested, other 
than that of such a reduction of prices of commodities as shall 
Jead to export, and such a rise in the value of money as is in- 
dicated by the advance of the rate of interest? Ans. Ko I 
think there is no other method. ' 

'A diminished power of consumption on the part of 
the public would have been rather advantageous to the system 



00 PHILOSOPHY OF PKICE. 

(coin) of circulation ? Ans. A diminished circulation would 
have checked importation. 

Theu the more deprivation the public was subjected to, 
the safer the system of convertible circulation ? Aqis. It is 
necessary sometimes . ... in order to restore circulation to 
a proper state. 

Was it the intention of the act of 1844 (reorganization of 
the bank) to check importations, so as to correct the unfavora- 
l)le balance of trade? Ans. I consider the act of 1844 was 
to cause the circulation of the country to be acted upon, by the 
exports and imports, in the same way as the currency would 
have been acted upon had it been entirely a metallic one. 

Then there having been an export of gold in the spring of 
1847, the tendency of the system was to check imports? Ans. 
Inasmuch as the export of a certain amount of bullion would 
contract the circulation of the country, and cause a fall of 
prices, it would tend to check importation. 

Then, in 1847, when there was a great deficiency of food, 
the tendency w^as to check an importation of food ? Ans. The 
export of the precious metals, by reducing the circulation, 
tended to keep down the prices of grain, and also kept down 
the price of manufactures which might be exjjorted in pay- 
ment. 

Do you think this system of circulation should be pre- 
served at any cost to the employment of the people ? Ans. I 
think it desirable that the circulation should be placed on such 
a footing tliat it should expand and contract in the same way 
that a metallic currency would do. I cannot vary from that." 

Mr. Scaly, of England, in his work on " Coins and Cur- 
rency," published at London in 1853, holds the folloMdng opin- 
ion of the Bank of England. And I might quote an entire 
volume of the like opinions uttered by eminent and competent 
men. Mr. Sealy says : 

" The commerce of the country is now in the power of the 
Bank of England, as it was before in the legislature. For leg- 
islative enactment we have substituted the decision of the Baiik 
Parlor J for a responsible government, composed of King, 
Queen, Lords and Commons, wc have substituted an irrespon- 
sil)le body composed of twenty-four directors, and a governor 
and de]>uty governor. To these we have confided the com- 
merce of this mighty empire. Instead of a mercantile system 
supported by merchants and manufacturers and agricultural in- 



PRICE AND ITS DEPENDENCE UPON CUREENCY. 89' 

terests, we have now the monetary system endangering the 
Avelfare of merchants, manufacturers and agricultural inter- 
ests— for the benefit of the fund-holding classes." 

Stephen Williamson, a prominent Liverpool merchant, in 
his pamphlet, "Bad Trade and its Causes," proves beyond 
question it is caused by a want of currency. He savs : 

'_' England has now entered upon the sixth year of com- 
mercial and manufacturing distress and decadence. There is. 
as yet not a single ray of light shooting up through the dark 
mercantile horizon. A crisis without parallel in the experience 
of the present generation not only rests upon us, but intensi- 
fies as time rolls on. When a condition of affairs bafiling all 
experience acquired in previous times of prostration exists, it. 
IS surely our paramount duty to investigate and to inquire 
whether this prolonged distress may not be traced in large^ 
measure to some special or peculiar cause. 

^ My object in writing this paper is to call attention to the 
serious injury inflicted on our commerce by the discreditino- of 
silver ; and my contention is, that the practical cutting off of 
silverfrom the world's money has been at the root of nmch of 
our distress during late years, and is now one of the chief hin- 
drances to the return of prosperity. Undoubtedly, our declen- 
sion in 1873, 1874, and part of 1875, was the natural revulsion 
from undue extension, and from the unduly high prices paid 
for labor and the products of our industry. Since 1875 these 
causes, however, have ceased to operate. It is undoubtedly 
true that hostile tariffs and the competition of several nations, 
(particularly the United States) have greatly curtailed the de- 
mand for our manufactured goods which previously existed 
within their borders; but we have a large and open field almost 
to ourselves m many quarters gf the globe ; and the lamentable 
fact is, that in these regions, peculiarly our own, trade contin- 
ues to languish as it does elsewhere, and the demand for our 
goods is greatly restricted and diminished. 

It will not be questioned that the large increase of the 
world's money, due to the Australian and Californian gold dis- 
coveries, led to a great extension of the world's commerce. 
Tlie interchange of commodities was marvelously stimulated ; 
labor had for many years a greatly augmented recom]3ense ; the 
material comfort and welfare of mankind were greatly promo- 
ted ; real and personal property increased enormously in value 
all over the civihzed world; the foreign commerce of England 



'90 PSILOSOPIIY OF PKICE. 

alone rose trom £250,000,000 in 1852 to £650,000,000 in 1875 ; 
tlie foreign commerce of many other nations rose in like pro- 
portion. From the snrplns gains of our commerce in those 
years, we invested many hundreds of millions of pounds ster- 
ling in state and corporation bonds, railways and industrial en- 
terprises, and in property and mortgages in foreign countries — 
leaving us immeasurably wealthier as a nation, notwithstand- 
ing many foolish investments, such as Turkish, Peruvian and 
Paraguayan bonds. It is difHcult to l)elieve that so great pros- 
perity and inci'ease of national wealth had proceeded from a 
cause apparently so inadequate to produce results so fabulous. 
Such, however, was in large measure the result of the enlarged 
reservoir of the world's money created by the accession of gold 
from the Australian and Californian mines. It acted as a stream 
of warm blood impelled through all the arteries of the world's 
commerce, vitally and powerfully stimulating the vast organ- 
isms of trade and industry. 

We have in this, our late national experience, a direct con- 
tradiction to the theories of some political economists who 
assert that, after all, international connnerce is only barter, and 
that money has little or nothing to do with its extent or vol- 
ume. The very small measure of truth underlying this asser- 
tion has led many intelligent minds astray. It is because the 
largely increased supply of money had guaranteed to men and 
nations the payment of large international balances, that the 
volume of the world's trade, prior to 1874, had augmented 
with such marvelous rapidity. And now it is in great measure 
because tlie Avorld has of late greatly restricted and diminished 
the capacity of its money reservoir, that distress and calamity 
augment and intensify around us. A large portion of the life- 
blood of commerce has been artificially congealed. The whole 
organism has felt the shock ; but the iinancial intellect has be- 
come so beclouded and benumbed as not to have fully realized, 
even yet, the cause of the deadening paralysis which has over- 
taken it. 

Let us present for consideration the diagnosis : The world, 
of late years, traded on an effective metallic capital estimated 
at £1,400,000,000. Of this, we have good evidence for believ- 
ing that about 

£750,000,000 were gold coins and l)ullion, 
and £fi5(»,0()(),()00 " silver coins and bullion. 

Now, we assert tliat the world, of late, has been commit- 
ting the suicidal act of discarding, discrediting and cutting ofi 



PEICE AND ITS DEPENDENCE UPON CUEEENCY. 91 

from performing its wonted functions one of the two agents or 
solvents for the liquidation of balances of international indebt- 
edness. In other words, the world, acting under the legal in- 
junctions of the leading monetary powers, has divorced from 
its monetary system that silver which, from time immemorial, 
has, conjointly with gold, formed its 'money.' WidesjDread 
suffering has been the inevitable result of its folly. 

Our unwise legislation of 1816, which made gold sole 
legal tender in England, has been the underlying cause of all 
this evil. For years we played upon the currencies of Europe, 
and often swept away large quantities of silver for transmission 
to India, where, with an admirable contradiction in our monetary 
legislation, we have enforced a silver currency. While availing 
ourselves of the stores of silver belonging to our continental 
neighbors, we constantly vaunted about the superiority of our 
gold cuiTency, and stimulated them to follow our short-sighted 
example. Even a Liberal Chancellor of the Exchequer (Mr. 
Lowe) boasted in full Parliament, in the year 1869, that he had 
made a convert of France. Germany, however, stole a march 
on France in the insane career which we had pointed out to 
them as the high road to success, and in 18Y4 decreed the de- 
monetization of silver and its substitution by gold. France, 
which had, in conjunction with the states of the Latin Union, 
jDrovided for the world an equilibrium or par of exchange be- 
tween the two metals, by means of her free-mintage system 
and making both metals full legal tender on the ratio of 15 1-2 
of silver to 1 of gold, thereupon suspended the free coinage of 
silver. France was driven to this act by the unwise monetary 
legislation of powerful neighbors. The par of exchange pro- 
vided betwixt gold and silver money was thereby lost to the 
world. Silver was dethroned. War to the knife was declared 
against that metal. Gold now reigns supreme and omnipotent. 

The results have been disastrous in the extreme. The 
hard money capital of the world has been practically reduced 
from £1,400,000,000 to £800,000,000, and yet men are at a 
loss to account for the greatly reduced interchange of connnodi- 
ties, and the greatly reduced prices now paid for property, for 
goods and for labor ! " 

Let us turn to the words of wisdom uttered by the late 

Mr. Ernest Seyd, one of the most able and reliable statisticians 

and financiers of Great Britain. He was the author of a very 

able and exhaustive book, advocating the restoration of the 



92 PHILOSOPHY OF PRICE. 

double standard to Great Britain, and his efforts are said to 
have produced a profound impression on his conservative coun- 
trymen. But financial disasters or events have done more in 
this direction than the able arguments of Mr. Seyd, In 1867, 
this far-sighted and clear-headed financier, in discussing this 
question, that was then exciting considerable interest, expressed 
himself very freely on the evils that M^ould probably fall on the 
world, in an attempt to discard silver as a full legal tender 
money metal. He said : 

" Throughout the world a fall ii^ prices will take place, 
injurious alike to the owners of solid property and to the labor- 
ing classes, and advantageous onl}', and unjustifiably so, to the 
holders of state debts and other contracts of that kind." 

He also said, that when these results followed the discard- 
ing of silver, all sorts of reasons would be brought forward 
to account for the distress, and thus the real cause would be 
neglected until this distress compelled thinking men to refer it 
to the legitimate cause. 

Blake, in his report on the precious metals, page 235. said : 

"With this continued decrease in the annual production, 
it seems probable that gold will soon begin to sensibly appre- 
ciate in value, unless some new and unlooked for discovery of 
placers shall be made, of which, however, there does not appear 
to be much probability. , 

It was argued by Chevalier and others soon after the great 
discoveries in Australia and California, that gold would neces- 
sarily dej)reciate in value ; that its purchasing power was des- 
tined to be much lessened by the great infiux of the metal 
from these new sources. But the relative value of gold has 
not changed as much as was expected, and it M^ould now seem 
that the supply did not more than keep pace with the ever in- 
creasing demands of commerce and industry, stimulated as 
they have been by an increasing supply of gold. The wonder- 
ful increase of the industrial activity of the world, resulting 
chiefiy from the varied developments and application of the 
physical sciences, has been suflicient to appropriate all the ex- 
cessive production of the past twenty years." 

North American Review : 



PRICE AKD ITS DEPENDENCE UPON CURRENCY. 93 

"A glut of loanable capital and low rates of interest are 
the inevitable final accompaniments of a shrinking money vol- 
ume and the consequent decline in market values." 

Sir Robert Peel in his great speech of May 6 and 20, 1844, 

on the British act regulating the issue of currency, said : 

"There is no contract, public or private ; no engagement, 
national or individual, which is unaffected by it. The enter- 
prises of commerce, the profits of trade, the arrangements 
made in all the domestic relations of society, the wages of 
labor, pecuniary transactions of the highest amount and of the 
lowest, the payment of the national debt, the provision for the 
national expenditure, the command which the coin of the 
smallest denomination has over the necessaries of life, are all 
affected by the decision to which we may come on that great 
■question wdiich I am about to submit to the consideration of 
the committee." 

A contraction of the money volume changes the relations 

between money and other things, and necessarily affects prices. 

John Locke long ago laid down the true law relating to the 

value of money, as follows : 

"Money, w^hile the same quantity of it is passing up and 
down the kingdom in trade, is really a standing measure of the 
falling and rising value of other things in reference to one an- 
other, and the alteration in price is truly in them only. But if 
you increase or lessen the quantity of money current in traffic 
in any place, then the alteration of value is in the money." 

That is, with a stable volume of money for a given popu- 
lation with given wealth, which determines the volume of 
business, variation in the price of commodities is a variation in 
the goods themselves as compare,d one thing with another ; but 
when the volume of money is changed, then the measure itself 
is changed, and we have what is taking place now, a double 
■effect — that is, both a change in the commodities under the 
law of supply and demand, as above stated, and a change in 
the measure itself affecting the price of everything. In fact, 
it is an admitted doctrine of political economy that there can 
not be a general rise or a general fall of prices except by a 
change in the value of money. A general fall or a general 



94 THILOSOPHY OF PRICE 

rise of prices, when properly understood, means simply that 
there lias been a change in the measure itself. 

I might continue references almost indefinitely, but the 
number given and the eminent sources from which they are 
derived ought to convince the most sceptical. 

"When a proposition of this magnitude has received the 
careful consideration of so many persons, distinguished alike 
for their honesty and ability, whose conclusions are almost a 
unit as to its truthfulness, there is no good reason why we 
should not accept them as final When this is done our future 
action regarding the correction or encouragement of the pres- 
ent condition of affairs becomes a sin of commission instead of 
omission. AVe act with a full knowledge of the facts 
before us. 

In describing the effects of contraction during Yan 

Buren's administration, Henry Clay said : 

"What our present situation is, is as needless to describe 
as it is painful to contemplate. . First felt in our great commer- 
cial centers, disasters and embarrassment have penetrated into 
the interior and at the present time rest like a black cloud 
over the whole nation." 

It has been justly said by one of the soundest and most 

practical writers that I have ever read, that : 

"All convulsions in the circulation of money and in the 
commerce of any country must originate in the operations of 
the government, or in the mistaken views and erroneous meas- 
ures of those possessing the ])ower of influencing credit and 
circulation, for they are not otherwise susceptible of convul- 
sion, and if left to themselves they will find their own level 
and flow nearly in one uniform direction." 

Our condition is the same to-day as has many times oc- 
curred in the history of the past, and has been brought about 
by the same causes. Our currency has been steadily contracted 
for many years, and during all that time with but an occasional 
breathing spell, business has been drooping and values have 
fallen. We have been tricked, as other nations have been, into 



PEICE AND ITS DEPENDENCE UPON CUEEENCY. 95 

placing our national lionor into our national credit. We have 
been induced — or seduced — to believe that our honor as a peo- 
ple consisted in paying our national bonds in gold, one hun- 
dred cents on the dollar, which were bought with greenbacks 
at par, worth only fifty-five cents in gold ; and by so doing 
we have brought business stagnation, and continued financial 
disaster, from year to year, upon a confiding people. 

"Why should United States bonds, bearing 4 per cent, in- 
terest, be worth one hundred and twenty-seven cents on the 
dollar while good farms cannot be mortgaged for over one- 
third of their value at Y per cent, interest ? "Why is it that 
bonds go up, and all products of labor, and labor itself, goes 
down ? Is that prosperity ? 

What labor and products lose in value finds a lodgment 
in the bonds and mortgages held against this same labor and its 
products, and all the vantage ground forced from labor and 
appropriated by capital, is really a loss to society and the na- 
tion, and weakens the government instead of giving it strength. 
The point made by Solon Chase is not only sound in logic but 
true in fact. He said : 

"I bought a yoke of steers a year ago for sixty dollars, fed 
them all summer and winter, and in the spring was oft'ered but 
sixty dollars for them in the market. IS'ow, who got the hay ?" 

What was true in the case of "them steers" is true of 
every class of property in this country. ISTow the question is, 
who gets this lost value ? It finds a lodgment somewhere ; that 
place must be with money. For, wherever that may be found 
it will show an increase in value over products and labor in 
proportion as products and labor have decreased. N^othing is 
plainer than this. 

The mistake is often made, that prices are not controlled 
by the volume of money, because they have neither risen nor 
fallen concurrently with, nor in exact proportion to the increase 
or decrease of such volume. The precious metals are difiiised 
over so vast a surface, and their current production is so small 



96 PHILOSOPHY OF PRICE. 

in comparison with accumulated stocks that it takes considera- 
ble time for changes in their yield to so affect their volume 
relati\'ely to population and business as to produce any sensible 
effect upon prices. The entire property interests of a country 
are united in maintaining and, if possible, in advancing the 
price of property, and in resisting to the uttermost any de- 
chne. A temporary maintenance of nominal prices, even in 
the presence of a shrinking volume of money, is especially 
practicable with imperishable property, such as real estate. 
When money begins to become scarce by reason of a shrinkage 
in its volume, the first effect upon real estate is found to be, 
not a dechne of its nominal price, but a diminution in the 
numl)er of transactions. Market reports quote real estate 
" dull,'''' '■'•few sales, hut ])Twes jirmP This stagnation is as- 
cribed to temporary causes, and a speedy recovery predicted. 
In order to maintain price, the terms of purchase are made 
easier. The amount of cash payments is reduced, and the de- 
ferred payments, secured by mortgage on the property, extend- 
ed over longer periods. After a time this expedient fails, and, 
even then, nominal prices are unnaturally held up for a short 
period by the struggles of those who have purchased upon 
these extended credits, and by the tenacity of owners who re- 
fuse to sell at lower figures, and mortgage their own property 
to protect their power to hold. The stagnation of voluntary 
transactions is finally followed l^y the activity of involuntary 
ones under the direction of sheriffs and by the foreclosure of 
mortgages. 

Upon any material decline in the price of real estate, a 
large class of investors, believing that the bottom has been 
reached, and desiring to profit by the reaction which they think 
is sure to come speedily, enter the market and temporarily 
check the decline. Another fall in prices sweeps them and 
their margins away, and a third class of dealers, now absolutely 
certain that bottom prices have been reached, and sure that a 



PEICE AND ITS DEPENDENCE UPON CURRENCY. 97 

furtlier decline is impossible, come in as purchasers. Each 
succeeding purchaser fortifies his conclusion, that present prices 
are bottom prices, by comparing them with and finding that 
they are no higher than the prices of some period in the past 
which is arbitrarily assumed to be a standard level, below which 
subsequent prices could never- permanently go. 

It is overlooked that price is only the expression of a rela- 
tion, and that no correct conclusions can be drawn from a com- 
parison of the prices of two periods, unless comparison be alsO' 
made of the money stock, population, and exchanges of both 
periods. Contrary to all calculations, as the volume of money 
shrinks, prices continue to fall, and these dealers encounter the 
fate of their predecessors. These operations repeat themselves 
until universal distrust prevails, and until it is found that, 
when money is decreasing in volume, prices have no bottom 
except a receding one, and that they are inexorably ruled by 
the volume of money. The effects of a decrease of the vol- 
ume of money in a particular country, arising from its abnor- 
mal outflow, or from its withdrawal from the channels of cir- 
culation through the distrust which prevails when unsound 
and speculative undertakings are breaking down, or when the 
country is convuised by political disturbances, are the same as 
the effects of a general decrease in the volume of money. The 
result in both cases is a fall in prices. But in the first case the 
equilibrium is restored by a quickly returning wave of prosper- 
ity, and the evils resulting are confined to individuals and to 
special localities ; and those dealers are fortunate who purchase 
in the first stages of the decline. But in the second case the 
cause of the fall in prices is radical, and must continue until 
prices go out of existence, unless the decrease in the volume of 
money is arrested. In the whole history of the world every 
great and general fall of prices has been preceded by a decrease 
in the volume of money. There has never been a decrease in 
the volume of money, nor has there ever been a stationary vol- 



98 PHILOSOPHY OF PRICE. 

lime of money, unless accompanied by a stationary population 
and commerce, which lias not sooner or later resulted in a gen- 
eral fall of prices ; and there has never been a recovery there- 
from except through a preceding increase in the volume of 
money. After the volume of money has begun to decrease, 
every dollar of credit extended at the old range of prices ag. 
gravates the disaster which must come sooner or later. Stag- 
nation and panic are nothing more nor less than the results of 
a struggle to make prices truly express the relation between 
money and all other exchangeable things. 

The true and only cause of the stagnation in industry and 
commerce now everywhere felt is the fact everywhere existing 
of falling prices caused by a shrinkage in the volume of money. 
This is, in part, the misfortune of mankind, as the mines have 
failed for several years, under energetic working, to yield the 
precious metals in quantities sufficient to keep pace with the 
increasing needs of the world for money. But it is in part 
due to the folly of mankind in throwing away a 1)enefaction of 
nature by discarding one of the precious metals. Existing 
evils date with that folly, which precipitated and now enor- 
mously aggravates them. 

Many learned and excellent persons and associations of 
persons in all parts of the world, whose instruments of obser- 
vation seem to have been adjusted for the examination of re- 
mote objects, and consequently, unfitted for, and a hindrance 
to the inspection and examination of anything near at hand, 
have furnished many far-fetched, incomprehensible and impos- 
sible causes for existing evils, which agree in nothing except 
their remoteness. They have seen through a glass darkly, or 
they would have discovered that the cause was all around and 
about them ; that it is the same cause that has invariably pre- 
ceded and accompanied similar evils. They would have seen 
that money in shrinking volume was engaged in its legitimate 
work of ruin. This is the great cause. All others are collat- 



PEICE AND ITS DEPENDENCE UPON CURRENCY. 99 

eral, cumulative, or really the effects of that primal cause. 
Practical men see what the mischief is, and they all see it alike, 
and, without formulating their ideas in set words and phrases, 
they all state it alike. Capitalists, large and small, give one 
and only one reason, for refusing to invest in productive enter- 
prises. Uniformly and universally the reason given is that 
prices are falling and may continue to fall, and that money is 
the best thing to get and hold while that state of things con- 
tinues. All can see that prices have fallen and are falling, 
although they may disagree, or may not trouble themselves to 
form any opinion as to the cause of the fall. And all can see, 
and do see, that it is falling prices which cause the stagnation 
of business, with all its necessarily attendant circumstances of 
an increasing pressure of debts, of decreasing employment and 
wages of labor, and of diminishing consumption. "Falling 
prices" is only another expression for an increasing value of 
money, and those who desire still further to appreciate the 
value of money by contracting its volume, desire still further 
to reduce prices, and still further to widen and deepen the gulf 
between money-capital and labor. 

Money-capital is the fund out of which wages are paid. 
Capital can only fructify through the employment of labor, 
and labor is comparatively helpless without capital. It is by 
the employment of labor that money-capital is produced and 
increased. It is in vain to advise those who depend upon their 
daily wages for their support, and who possess no capital but 
their willing hands, to change their places of residence and en- 
gage in agricultural pursuits. Even had they the means to 
emigrate, which most of them have not, they would still have 
to be supplied with seed, implements, and animals, and with 
support from seed-time to harvest. It is still more plainly fu- 
tile to advise them to engage in any species of handicraft or 
manufacture on their own account. 

In modern times human labor is only available in connec- 



100 ■ PHILOSOPHY (3F PPJCE. 

tion with machinery and apphances. A pohcy wliich tends to 
a constant fall of prices, and therefore compels capital from the 
jnstifiable instinct of self-preservation to withdraw from pro- 
duction, is a policy which reduces laborers to a worse condi- 
tion than if money were wholly abandoned and the system of 
barter were re-established. The conditions of the laborer are 
as bad when money-capital is not employed, as if it did not 
exist. The effect of falling ])rices is the same upon the small- 
est capitalist as upon the largest. The hope of gain is for all 
of them the only inducement to take the risks and labor of 
enterprises, and they will all prefer to consume their accumu- 
lations rather than to invest with the certainty of losing them. 
They will, of course, consume them as slowly as possible, and 
to that end will reduce their expenditures within the smallest 
possible limits. Laborers thrown out of employment must in 
some way have a bare subsistence, l)ut there can be no other 
sources fpr it than the scanty earnings of such as are employed, 
and the capital in existence, which cannot refuse food to the 
starving. 

That shrinking money and falling prices are the cause of 
existing evils, was pointed out l)y the London Economist in its 
review (1S69) of the previous Unancial year. It then said: 

"It may be safely affirmed that the present annual supply 
of thirty millions sterling of gold is no more than sufficient to 
meet the re(piirements of the expanding connnerce of the 
world, and prevent that pressure of transactions and commodi- 
ties on the precious metals which means, in practice, prices 
and wages constantly tending toioard decline. The real dan- 
ger is that the present supplies should fall off, and among the 
greatest and most salutary events that could now occur would 
be the discovery of rich gold deposits in three or four remote 
and neglected regions of the earth." 

Having shown l)y the testimony of the ablest writers for 
long years in the past, together with the experiences of all 
nations, as far back as economic writings extend, also by the 
best of our own statesmen and our own national experience that 



PRICE AND ITS DEPENDENCE UPON CUKRENCY. 101 

'price depends upon the circulating medium, and that the cir- 
culating mediuiii makes the ability to purchase, it now devolves 
the more difficult task of expressing clearly liow it is done. 
We see and know that a blade of grass grows and extends with 
each successive day's sun, but liow it grows has never, in a suc- 
cessful manner, been explained. If my readers will follow me 
closely I will give my reasons in as intelligible a manner as 
jDOSsible for the conclusions above stated. Money is the meas- 
ure of values. That must be an admitted fact at the outset. 
Tills being true, all values must be determined by its measure- 
ment. As a nation we have selected the dollar to be our unit 
of value. Hence all values are either multiples or divisions 
of that unit, the dollar. It therefore follows that the less value 
the unit or dollar represents the greater mtmher of units or 
dollara a given amount of value will possess. For example, 
3600 pounds of wheat will show sixty bushels of wheat with 
the unit or bushel representing sixty pounds, but change that 
unit or bushel to represent but thirty pounds and it will in- 
crease the measurement to 120 bushels. Increase the unit or 
bushel to ninety pounds and it will shrink the measurement to 
40 bushels. In fact, the value represented by the dollar is al- 
ways the divisor, the amount of values under consideration the 
dividend, and the miinher of values the quotient. From this 
it is plain that the size of the divisor determines the size of the 
quotient provided the dividend is always the same, which it is 
in this illustration. Let us represent all labor productions 
as the dividend, being the whole sum of produced values. 
When we come to reduce this amount to the unit or dollar of 
value, does it not follow that the more value the unit or dollar 
possesses the less number of units or dollars the quotient will 
give ? But to show more plainly my proposition, let us again 
suppose the whole j)roduction of values for the year is repre- 
sented by a space of 1,000 feet cubic measure, that is 1,000 
feet long by one foot in depth and breath. If we had 1,000 



102 PHILOSOPHY OF PKICE. • 

measures one foot deep, one foot wide, and oiife"^foot in length, 
they would exactly till up the 1,000 cubit feet of space. Now 
if each space or cubic foot represented productive value to the 
amount of one dollar, the proposition will be stated complete. 
"When the people brought their products to be measured, those 
who filled ten measures would have ten dollars in value ; those 
who filled 100 measures would have 100 dollars in value ; and 
so on until the whole product had been measured. If the 
measures remained the same in capacity, producers could calcu- 
late exactly upon the value of their productions. But suppose 
these measures should be increased in number 100 per cent, 
(bear in mind the space or volume of products remains the same), 
then the measure would be increased in number to 2,000, and 
their capacity for measurement would be decreased one-half. 
Now the measures would contain but one-half of a cubic foot, 
and when the producer brings his products for measurement 
as before, he finds that instead of filling ten measures as at 
first he can fill twenty. The other can fill 200 measures. The 
result is, that while they received ten, or one hundred dollars 
before, they now receive twenty, or two hundred dollars as the 
case may be. But, suppose the number of measures is dimin- 
ished to 500, then, in order to fill up the space, which includes 
the entire volume of products, their capacity must be doubled. 
They nmst now be two feet long, one foot deep, and one foot 
in width. The producers come for measurement as before and 
find that on account of the increased size of the measure they 
can only fill five and fifty measures respectively, and as a con- 
sequence one receives five and the other but fifty dollars. If 
we represent the period of our l)usiness year by the 1,000 feet 
of cubic space, the measures which fill that space by our circu- 
lating medium, and our whole volume of production from bus- 
iness by tlie products, we then have this illustration applied to 
the increase or decrease of the value in the unit or dollar of 
our measurement of values, and showing its resulting effects — 



PRICE AND ITS DEPENDENCE UPON CURRENCY. 103 

all of which goes to prove the truth of this statement : the 
cheaper the dollar the more dollars ; the dearer the dollar the 
less dollars. 

We see from this conclusion that the man who owns the 
•dollar is interested in having its value increased to the utmost 
extent, while the man who accumulates products to purchase 
these dollars is interested in having their value reduced so that 
he may obtain a larger number of them for a given amount of 
his products. This being true the right action in the case 
would be equal justice to both. The laws of every Repub- 
lic, especially of ours, are founded upon the principle of " the 
greatest good to the greatest number." In this principle the 
fact is recognized that the same law will not, in its application, 
inure to the benefit of all ; that some must suffer through its 
working ; but if it is for the interest of the majority the mi- 
nority must acquiesce. 

ISTow, in this nation, a very large majority of the popula- 
tion are poor. They are people whose only capital is invisible, 
and whose means of support is through labor. Again, where 
one person is found free of debt, thirty-three are discovered to 
be involved. Where three persons are comfortably fed, 
housed, and clothed without labor, ninety-seven are in reduced 
circumstances. The census returns show the startling fact that 
the average of wealth in this nation is but a trifle over three 
hundred dollars per capita. Imagine the number of paupers 
to offset the wealth of Yanderbilt. 

Then, is it not true, that our economic laws should be so 
framed as to aid the poor as against the unjust encroachments 
of the rich ? Do not the poor of this land come directly under 
the application of the foregoing principles ? Some will say the 
rich will take care of the poor. As well might we expect the 
wolf to rear the young lambs. Not one man in a thousand 
who l)ecomes wealthy, after having tasted the bitter fruits of 
poverty, but forgets that he was ever poor and becomes the 



104 PHILOSOPHY OF PRICE. 

worst enemy of the unfortunate, and those who inherit great 
wealth inherit wdth it a contempt for the laboring classes. 
Such is the contaminating influence of money. 

The only manner by which the general good of the public 
can be subserved is through the honest application of whole- 
some general laws rigidly enforced. This is due to the people 
and this they have a right to expect. 

In concluding this chapter I quote from a late writer as 
follows : 

''The scheme of demonetizing one of the metals through- 
out the western world originated soon after the discovery of 
gold in California and Australia, at a time when the yield was 
at what has since proved to have been its maximum, but which 
was then expected by many to continue on an ascending scale 
for an indefinite period. An eminent English writer (De Quin- 
cey) published at that time an elaborate collation of current ac- 
counts, from w^liich he arrived at the conclusion that the 
annual out-turn of gold M'ould soon reach seventy millions ster- 
ling, or $350,000,000. On the basis of such expectations, the 
governments of Europe were invoked by Chevalier and others 
to prevent the anticipated depreciation in the value of money, 
or, in other words, the anticipated rise in general prices, by 
the demonetization, not of silver, but of gold. 

Chevalier (Fall of Gold, l85()-\57) said: 

'The quantity of gold annually thrown on the general 
market apprqiiches, in round numbers, a milliard of francs 
(1200,000,000). 

These two countries (California and Australia) nnist, for yet 
a long series of years, produce gold in such (piantitie^ and on 
such conditions as to render a marked decline in its value in- 
evitable. 

It is absolutely certain that so vast a production should be 
accompanied with a great reduction in value. 

In no direction can a new outlet l)e seen sufficiently large 
to absorb the extraordinary production of gold which we are 
now witnessing, so as to prevent a fall in its ^'alue. 

Unless, then, we possess a very robust faith in the innno- 
bility of human affairs, we must regard tlie fall in the value of 
gold as an event for which we should prepare without loss of 
time.' 

Under these appeals of Chevalier and others, several na- 



PRICE AND TTS DEPENDENCE UPON CURRENCY. "*,05 

tions in Europe, notably Germany and Austria in 1857, de- 
monetized gold. It is probable that the movement in that 
direction would have become universal in Europe but for the 
resistance of France. It was changed, at least as early as 1865, 
into a movement for the demonetization of silver. In the con- 
vention of 1865, in which the Latin union was formed, Bel- 
gium, Italy, and Switzerland insisted strenuously upon the 
adoption of the gold standard, but were overruled by France. 
But this change, from demonetizing gold to demonetizing sil- 
ver, was more of form than of substance. The object aimed 
at by both was through a disuse of one of the money metals to pro- 
tect the creditor classes and those having fixed incomes against a 
fall in the value of money aud a rise in general prices. This is 
the pith and marrow of the monetary discussions of the last 
twenty-five years." 




rHILOSOPHY OF PRICE. 



CHAPTER III. 

PRICE AND ITS RELATION TO BUSINESS. 

The laboring classes of all civilized nations have been, 
and are, as a body, poor. All wealth being the production of 
labor, therefore, laborers could have possessed it, had not 
something intervened to prevent this natural result. Even in 
our own country, where the reward of labor is greater than in 
most others, some cause is operating with continual and grow- 
ing effect to separate production from the producer. The wrong 
is evident, but neither statesmen nor philanthropists have 
traced it to its true source ; and hence they have not been able 
to formulate any plan sufficient for its removal. Believing 
both cause and remedy lie with our circulating medium, and 
that the great mass of our people have been led to distrust 
their own comi^etency to comprehend the subject, I propose 
to discuss it in the plainest terms possible. In doing so, con- 
clusions must be arrived at after carefully considering all the 
factors entering into them. Solid facts and not abstruse the- 
ories are necessary in the examination of this question. 

In a previous chapter I have shown the dependence of 



PKICE AND ITS RELATION TO BUSINESS. 107 

price upon the amount of domestic currency in circulation. In 
this chapter I shall endeavor to explain the relation that price 
has to the business of the country. Not to any particular 
branch, but to the general business conducted among us as 

citizens. 

I shall begin by showing the various stages through which 
the volume of our currency has passed ; the numerous laws 
bearing upon it, and the evident conclusions to be dra^vn from 
the arguments and proofs presented. I shall neither conceal 
nor color anything to afEect or promote my argument, but give 
plain facts in plain terms. 

The awakening interest manifested among all classes of 
people upon this question, seems to demand a thorough inquiry 
into the subject matter. Without further delay, only to ask of 
my readers a careful perusal in a friendly but critical spirit, I 
will begin the investigation. 

The story of currency contraction has become an "oft-told 
tale"; yet, being a crime of a free government against a free 
people, and by their own chosen representatives, it should be 
repeated as often as possible, that all may come to know where, 
and through whose instrumentality their present distressing 
condition originated. 

After the war closed in April, 1865, the strength of the 
government had been tested, and the preservation of the Union 
clearly demonstrated. The people once more directed their 
attention to the cultivation of the arts of peace. January 1, 
1866, found us as a nation about three bilhons of dollars in 
debt,' made up of interest and non-interest bearing obligations. 
It is'worthy of remark at this point, and is a fact not generally 
known, that up to the time of Lee's surrender not a single dol- 
lar of gold or silver had been subscribed or paid by any banker 
or capitahst, either in Europe or America, for a bond of the 
United States. Also, that it was about seven months after 
that event before a single bond had been sold in the money 



108 PHILOSOPHY OF PRICE. 

markets of the Old World. Thus we see all this vast amount 
of debt was being handled by our own people ; and their pros- 
perity at that period has never been equaled before nor since. 
The reason for this is plain. About one billion five hundred 
millions of this indebtedness was being used by the people as 
a circulating medium. In that capacity it was giving the gov- 
ernment no trouble. Gold and silver "vvere hiding where tliey 
always do in times of trouble, and dared not venture out ; con- 
sequently, they did not enter into the aggregate of the circu- 
lating medium at that time. Among this currency was a large 
amount of interes1>bearing notes, variously estimated from 
twelve to fifteen hundred millions. This with greenbacks and 
national bank bills made up the currency of tlie nation. 

Greenbacks had risen from 46 to 71 per cent measured by 
gold value; this, too, with over $50 of circulating medium per 
capita of population. Our situation at that time indicated 
many years of financial prosperity. Our debt was being cared 
for, and held among our own people. The men of both armies 
had returned home, and were uniting their efforts to rebuild 
the wealth of the nation destroyed by merciless war. The im- 
petus given to business and production by this means was truly 
marvelous. Not only did this vast increase of the volume of 
business ciill for more currency, but the entire South had to l)e 
supplied. Human wisdom, to-day, can find no reason for the 
subsequent course adopted by the government. The fact of 
supplying the people of the South from this stock of currency 
was, of itself, a question of great moment to the whole nation, 
which seems to have been entirely overlooked. There is not 
the least doubt, had Congress issued full legal tenders for this 
whole amount, they would have appreciated to gold value long 
before specie payment was enforced. "After the battle come 
the ghouls, to fatten and thrive on its victims." Just so with 
regard to our national finances. At that -time the bankers and 
capitalists came in swarms to enrich themselves by reason of 



PEICE AND ITS RELATION TO BUSINESS. 109 

the nation's disaster. The lamented Garfield said " that the 
people would remember the bankers and capitalists of Wall 
street as the Germans remembered the robbers of the river 
Rhine, who never came out from their strong-holds but to 
plunder and rob them." 

They performed their task so well that at one blow twelve 
hundred millions of what had been circulating as currency, 
was converted into 5-20 bonds, bearing six per cent interest, 
and sold abroad. The interest on these bonds was payable in 
coin, and since that time we have been raising and shipping 
corn, wheat, cotton, etc., to pay it. The annals of economic 
history affords no parallel to this great crime against the indus- 
tries of a confiding people. The shock that immediately fol- 
lowed beggars description. The people had learned, during 
the war, to indulge somewhat in luxuries. The desire to live 
in more ease and comfort had naturally grown upon them dur- 
ing this season of prosperity. They enlarged their business, 
built new homes, bought new farms and began new enterprises, 
for which, to a considerable extent, they had gone in debt, an- 
ticipating as easy payments in the future as had been made in 
the past. They dreamed of no change in values, and all was 
progressing happily and smoothly, when, like a flash of light- 
ning from a clear sky, came this act of Congress which took 
from them more than one-half of their means of payment. 
Every debt, national and individual, was by means of that act 
doubled. This brought financial trouble all over the land. 
Not satisfied with funding this large amount of circulating 
medium, early in that year (April, 1866), Congress permitted 
the Secretary of the Treasury to further contract the currency 
by burning up on an average five million dollars of greenbacks 
each month. In order to obtain these greenbacks, he was au- 
thorized to sell bonds drawing interest and buy them. This 
continued until February 4, 1868. By that time a wail had 
gone up from the people that even Congress could not ignore. 



110 PHILOSOPHY OF PRICE. 

and an act was passed forljidding the Secretary of tlie Treasu- 
ry reducing the circulating medium further. President Grant 
refused to sign the bill, and it became a law without his signa- 
ture. In the mean time failures had increased from 495 in 
1863 to 2,864 in 1868. Our currency had been reduced in 
volume from $1,863,409,216 in 1866 to less than $794,756,112 
in 1868. We learn from these figures both the cause and the 
effect. 

One other feature of the question that escapes notice is, 
at this time bonds were selling at a premiijm. If that fact 
was significant in any sense, did it not show the rapid ap- 
preciation, in gold value, of our currency as it then was consti- 
tuted ? 

About this time there Avas also considerable discussion 
through the press as to what these bonds should be paid in. It 
was plainly apparent that the government would take advant- 
age of its option and soon begin to call them in. 

From 1863 to 1867 there had been bonds sold amount- 
ing to $1,429,392,400. These were all paid for in greenbacks 
at par. Reckoning the discount between greenbacks and gold 
we find that the price paid in gold value was only $945,251,- 
220, leaving a difference of $484,141,180. It requires no 
great thought to understand that when these bonds were de- 
clared payable in coin their value was increased by this dif- 
ference. 

March 18, 1869, the following act was passed by Con- 
gress : 

"That in order to remove any doubt as to the purpose of 
the government to discharge all just obligations to the public 
creditors and to settle conflicting questions and interpretations 
of the law l)y virtue of which such obligations have been contract- 
ed, it is hereby provided and declared that the faith of the United 
States is solemnly pledged to the pa3'ment in com. or its equiv- 
alent of all the ohligations of the United States not bearing in- 
terest, known as United States notes, and of all the interest- 
hearing ohligations of the United States, except in cases where 



PKICE AND ITS EELATION TO BUSINESS. Ill 

the law authorizing the issue of any such obligations has ex- 
pressly provided that the same may be paid in lawful money 
or other currency than gold and silver." 

When this became a law the bondholders had thereby 
made, through its operation and effects, the sum of $484,141,- 
180, in the exchange of greenbacks for bonds that were to be 
paid in coin. 

That the original contract between the people and the 
bondholder implied their payment in lawful money, either 
paper or coin, I quote the following as proof. 

In a speech delivered in the Senate February 2Y, 186T, 

John Sherman said : 

"Equity and justice are amply satisfied if we redeem 
these bonds at the end of five years in the same kind of money, 
of the same intrinsic value it bore at the time they were issued. 
Gentlemen may reason about this matter over and over again, 
and they cannot come to any other conclusion ; at least that has 
been my conclusion after the most careful consideration. Sen- 
ators are sometimes in the habit, in order to defeat the argu- 
ment of an antagonist, of saying that this is re|3udiation. Why, 
sir, every citizen of the United States has conformed his busi- 
ness to the legal tender clause. He has collected and paid his 
debts accordingly," 

In 1868 he wrote to a friend as follows : 

'"''Dear Sir ^ I was pleased to receive your letter. My 
personal interests are the same as yours, but like you, I do not 
intend to be influenced by them. My construction of the law 
is the result of careful examination, and I feel quite sure an 
impartial court would confirm it, if the case could be tried be- 
fore a court. I send you my views as fully stated in a speech. 
Your idea is that we propose to repudiate or violate a promise 
when we offer to redeem the 'principal' in legal tenders. I 
think the bondholder violates his promise when he refuses to 
take the same kind of money he paid for the bonds. If the 
case is to be tested by the law, I am right ; if it is to be tested by 
Jay Cook's advertisements, I am wrong. I hate repudiation or 
anything like it, but we ought not to be deterred from doing 
what is right by fear of undeserved epithets. If under the 
law as it stands, the holders of the 5-20's can only be 
paid in gold then we are repudiators if we propose to pay 



112 PHILOSOPHY OF PRICE. 

otherwise. If the bondholder can legally demand only the 
kind of money he paid, then lie is a repndiator and extortioner 
to demand money more valuable than he gave. 
Truly yours, 

John Sherman." 

Again in 18G9, in another speech in the Senate, Mr. 

Sherman said : 

"The contraction of the currency is a far more distressing 
operation than Senators suppose. Our own and other nations 
have gone through that process before. It is not possible to take 
tfuit voyage without the sorest distress. To every person, ex- 
cept a cajjitalist out of debt, or a salaried officer, or annuitant, 
it is a period of loss, danger, lassitude of trade, fall of wages, 
suspension of entei-prise, bankruptcy and disaster. It means 
the Txtin of all dealers whose debts are twice their business 
capital, though one-third less than their actual property. It 
means the fall of all agricultural productions without any 
great reduction of taxes. "What prudent man would dare to 
build a house, a railroad, a factory, or a barn, with the c^'vta'in 
fact before him that the greenback that he puts into his im- 
provements will, in a few years, be worth 35 per cent, more 
than his improvements are then worth ? When the day comes, 
every man, as the sailor says, will be close-reefed ; all enterprise 
will be suspended ; every bank will have contracted its cur- 
rency to the lowest limit, and the debtor compelled to meet in 
coin a debt contracted in currency will find the coin hoarded 
in the treasury, and no representative of coin in circulation ; 
his property shrunk, not only to the extent of the contraction of 
the currency, but still more by the artificial scarcity made by 
the holders of gold. To attewjyt this is to imjyose upmi our 
people ', by arresting them in the midst of their lawful business, 
and applying a new standard of value to their property with- 
out any deduction of their debts, or giving them any opportu- 
nity to compound with their creditors, or to distribute tlieir 
losses ; and would be an act of folly without example in evil in 
modern times." 

Hon. B. F. Wade, known from Maine to California for 

his sterling honesty and incorruptibility, in a letter to a friend, 

said : 

"Vice-President's Chamber, [ 
Washington, Dec, 13, 1807. \ 
Yours of the 8th inst. is received, and I i»ust cordially 



PRICE AND ITS RELATION TO BUSINESS. 113 

agree with every word and sentence of it. I am for the labor- 
ing portion of our people. The rich can take care of them- 
selves. While I mnst scrupulously live up to all the contracts 
of the Government, and fight repudiation to the death, I will 
tight the bondholder as resolutely when he undertakes to get 
more than tlie pound of flesh. We never agreed to pay the 
5-20's in gold ; no man can find it in the bond, and 1 never 
will consent to have one payment for the people. It would 
sink any party, and it ought to. To talk of specie payments or 
a return to specie under present circumstances, is to talk like a 
fool. It would destroy the country as effectually as a fire. 
And any contraction of the currency at this time is about as 
bad. But I have not time to give my ideas in full. 

Yours truly, 

Benjamin F. Wade. 
Capt A. Denny, Eaton, O." 

Garrett Davis offered the following ainendment : 

"That the just and equitable measure of the ol3ligations of 
the United States upon their outstanding bonds, is the value in 
gold and silver coin of the paper currency advanced and paid 
to the Government on these bonds." 

He declared the resolution "robbery and w^ould make the 
people pay nearly $900,000,000 more than by law and equity 
they should pay." 

Senator Bayard seconded the arguments of Senator Davis : 

"Suppose instead of issuing paper money, it had pleased 
Congress to order an abasement of our national coinage. Sup- 
pose twenty-five per cent, more of alloy or worthless metal had 
been interjected into our currency, and with that base coinage, 
men had come forward to buy your bonds. What would be 
thought of the man who, when the day of payment of those 
bonds arrived, should say, 'I gave you lead, or lead in certain 
pro]3ortions ; but for all the worthless metal I handed you, you 
must give me back pure gold.' Whether he was more mad- 
dened or more dishonest would be the only question arising 
in men's minds." 

The facts are, the Government received nothing but green- 
backs for the bonds, dollar for dollar, during the entire war ; 
that we never agreed to liquidate the principal of the debt in 
gold, the original contract being far from so stipulating ; and 



114 PHILOSOPHY OF PKICE. 

tliat the contract in question was ignored and another substi- 
tuted in the interest of the bondliolders, it being this latter that 
provided for the redemption of the bonds in coin. The ablest 
men in all parties and in Congress have made that acknowledg- 
ment. To quote the language of the late Senator O. P. Mor- 
ton, of Indiana : 

"We should do foul injustice to the Government, and to 
the people of the United States, after we sold those bonds on an 
average for not more than sixty cents on the dollar, now to 
propose to make a new contract for the benefit of the bond- 
holders." 

And that noble old Commoner, Thaddeus Stevens, ex- 
pressed the sense of every true patriot in the House of Repre- 
sentatives when he uttered the following emphatic declarations 
in 1868, his voice trembling with emotion at the outrage which 
it was sought by powerful combinations to put into eifect in 
the interest of the bondholders in changing the 5-20's into 
gold bonds : 

"If I knew that any party in this country would go for 
paying in coin that whicli is payable in money, thus enhancing 
it one-half ; if I knew there was such a platform and such a 
determination this day on the part of any party, I would vote 
for the other side, Frank Blair and all. I would vote for no 
such swindle upon the tax-payers of this country. I would 
vote for no such speculation in favor of the large bondholders, 
the millionaires who took advantage of our folly in granting 
them coin payment of interest." 

The object of the framers of the law could not have been 
to strengthen the puljlic credit. The amount of credit which 
either a nation or an individual can possess, depends upon the 
strength and extent of the belief among lenders and capitalists 
that the borrower is both able and willing to meet the exact 
terms of his obligations. An offer fo do more would sul)ject 
the debtor to well-merited suspicion and distrust. He can not 
improve his credit by promising to pay a larger amount of 
money, or money of greater value, than the terms of the obli- 
gations held against him require. 



PRICE AND ITS RELATION TO BUSINESS. ■ 115 

The sufficient, best, and only means of improving credit, 
public or private, is exact performance of contracts. The 
debtor that insists upon all his rights and at the same time per- 
forms all his duties, is the one most confided in. Credit can 
be strengthened by fulfilling contracts, but not by changing 
them ; by performing all promises and not by making new 
ones. ISTor could the honest object of the framers of the law 
have been to advance the value of bonds already sold and in 
the hands of purdiasers. It would be of great public import- 
ance to enhance the value of bonds which the Government 
was proposing to sell, but to overload the country with addi- 
tional burdens for the purpose of enhancing the value of out- 
standing bonds, would be to subserve gratuitously and unjustly, 
private interest at the public expense. It would be very grati- 
fying to national pride to have the bonds of the United States, 
now in private hands, command the highest prices in the 
markets of the world, but it could scarcely be deemed a wise 
financial policy in the present condition of the country to ob- 
tain that gratification by paying a premium for it. If, how- 
ever, it were deemed advisable to enhance the value of bonds 
already sold, it should have been done by some plain and direct 
method, and in such a way that the country might know ex- 
actly what it was going to cost — as for instance, by increasing 
the principal or rate of interest of outstanding bonds. It 
should not have been done by the indirect method of changing 
the medium of payment from gold or silver, at the option of 
the Government, to gold alone. The additional burden which 
that might impose, from a rise in the value of gold, is incal- 
culable. 

The passage of this act, while it declared the bonds pay- 
able in coin, was done when coin was at a premium of nearly 
25 per cent, which, of course, added at once 25 per cent of 
value to the bonds, and at the same time lessened the means of 
payment to the same extent by its effects in producing a gen- 



116 PHILOSOPHY OF PRICE. 

eral decline of i^rices. ^Vliy it was necessary at that time to 
strengthen the pubHc credit, and why it was an act of justice (?) 
to the people of the United States to have the whole basis of 
their indebtedness changed and increased by fnlly one-fovirth 
its amount, will always remain a mystery to every student of 
political economy. 

This was the first time the contract between the people 
•and the bondholder had been changed. I quote from an emi- 
nent English author on this point, Professor McCulloch. He 
says : ♦ 

" To make any direct change in the terms of the contract 
entered into between individuals would be too barefaced and 
tyrannical an interference with the rights of property to be 
tolerated. 

Those, therefore, who endeavor to eiiri<ih 07i£ ^?c«'^ of soci- 
ety at the expense of cuwther, fyul it necessary to a-ct ivith great 
caution and reserve, and to substitute artijice for open and 
avoioed injustice. Instead of directly altering the stipulations 
in the contract, they ingenuously bethought themselves of alter- 
ing the standard by which the stipulations were to be adjusted. 

They have not said, in so many words, that 10 or 20 per 
cent should be added or deducted from the mutual debts of 
society, l)ut they have, nevertheless, effected this by making a 
difference in the value of the currency." (Increased or dimin- 
ished its quantity.) 

But, as the sequel shows-, this was only a portion of the 
scheme. The next year, July 1-1, 1870, Congress passed a 
funding bill which authorized the sale or exchange at jsar for 
other bonds, fifteen hundred millions of interest-bearing l)onds 
to run 10, 20 and 30 years, with interest and principal payable 
in coin. After the funding of these bonds had been accom- 
plished the last act was to be perpetrated. Feb. 12th, 1873, 
Congress passed an act dropping the standard silver dollar from 
our coinage, and in 1875 demonetized it. This act made our 
whole national indebtedness payable in gold and necessarily 
creating a new basis for the payment of all debts, public and 
pri vate. 



PEICE AND ITS RELATION TO BUSINESS. 117 

This again added to the burden of debt and also increased 
the diflicnlties of payment. The contract had been changed 
again. It seems as though the moneyed men on either side of 
the Atlantic owned our Congress ; and the people, to whom we 
must look for means of payment, were ignored entirely. 

The fact that over eleven thousand failures were reported 
during these two years is sufficient proof of the manner it was 
"benefiting" the nation. But this was not enough. Jan. 
llr, 1875, the specie resumption act was passed. It author- 
ized the Secretary of the Treasury to first sell bonds to l)uy 
silver for the purpose of exchanging and withdrawing the ]30s- 
tal currency and scrip from circulation. About eighteen mil- 
lions of 5 per cent bonds were sold for that purpose. There 
were also sixty-five millions of 4 1-2 per cent, and twenty-five 
millions of 4 per cent bonds sold for the purpose of retiring 
legal tender notes, which are still drawing interest. Here we 
see bonds of the United States sold on a long time that are 
now worth, and command a premium of 27 per cent, to take 
from the people the best small currency they ever had, and to 
retire from circulation the best medium of exchange known to 
any civilized nation. 

The failures following this, 1875-6-7, for each year re- 
spectively were 7,740, 9,092 and 10,480. This indicates the 
" success " of the experiment. The silver commission, in "their 
report, say : 

"Its true character, as now interpreted, was neither 
avowed in Congress nor understood by the country aT the time 
of its passage. The phraseology of the act created the im- 
pression that there was to be no reduction of the aggregate of 
paper money, but that legal-tender notes were to be diminished 
only as bank-notes were increased. As the act is administered 
in practice, both classes of notes are being reduced at the same 
time, while the population of the country is expanding. The 
words of the act may justify this method of administration, 
but it was not with that understanding that it was sanctioned 
by Congress. 



113 PHILOSOPHY OF PRICE. 

A more fatal misconception grew out of the ignorance 
that prevailed almost universally mitil after the passage of the 
resumption act, that silver had been demonetized, and hence, 
that a law providing for specie payments was really a law for 
gold payments. The people were not aware that coin then 
meant gold, and that coin payments involved the shriveling of 
.all values to the measure of a single metal. They were in fa- 
vor of resumption but not confiscation, and they were not 
-aware that resumption as proposed was but another name for 
spoliation. Although the period fixed for this spoliation was 
nominally in the future, it actually commenced at once, and is 
now proceeding day by day. It having been made certain, so 
far as the law could make it certain, that each dollar of the 
actual money of the country would, on a given day in the 
near future, be raised to the value of a gold dollar, the univer- 
sal tendency was, and has continued to be, to change all forms 
-of property into money, and to refuse investment in either 
property or productive enterprises. Moneyed capitalists, know- 
ing the disastrous effects which the impending fall of prices 
would have on the financial condition of borrowers, pruden- 
tially withdrew or diminished all credits and hastened to real- 
ize on securities. They have never been deceived, for one mo- 
ment, by the idle fallacy that resumption in gold involved an 
appreciation in the value of the legal-tender notes and a fall in 
prices only to the extent of the present difference between the 
value of those notes and gold. They knew that the apprecia- 
tion of legal-tender notes must reach that vastly higher level 
which the value of gold must reach when hundreds of millions 
•of it were and are demanded for resumption, and that prices 
would sink to a corresponding point of depression." 

In the campaign of 1876 there appeared a new feature in 
the economic views entertained by the people. Previous to 
that time they had considered " finance " too deep a study, and 
in consequence it had been left almost entirely with their con- 
gressional representatives for a solution. But, then, the ques- 
tion of American finances began to l)e discussed by them — the 
acts of Congress and votes of members were freely criticised. 
Ugly questions were being asked, which soon developed the 
fact that the average Congressman was a])0ut as ignorant of the 
•effect of his vote as were his constituents. All that was neces- 



PEICE AND ITS RELATION TO BUSINESS. 119* 

sary to pass an act touching the finances was to "convert" tlie: 
few leaders. 

The most striking evidence, perhaps, of the public inatten- 
tion to the effect of the coinage act of 1873, is the fact that.. 
President Grant, who signed it, and who was critically observ- 
ant of the legislation of Congress, had no knowledge of wliat: 
it really accomplished in relation to the demonetization of sil- 
ver, and was> still uninformed about it as late as the following 
October. If the President of the United States, in daily in- 
tercourse with the public men of the country, had failed to 
hear during certa,inly eight months that the laws no longer per- 
mitted money to be coined from silver, it must be true that the 
ignorance on the subject was general and profound. 

In a letter written October 3, 1873, to Mr. Cowdrey, Gen- 
eral Grant said : 

"I wonder that silver is not already coming into the mar- 
ket to supply the deficiency in the circulating medium. * * * 
Experience has proved that it takes about $40,000,000 of frac- 
tional currency to make the small change necessary for tlie 
transaction of the business of the country. Silver will gradu- 
ally take the place of this currency, and further, will become. 
the standard of values, which will be hoarded in a small way. 
I estimate that this will consume from two to three hundred 
millions in time, of this species of our circulating medium. 
.* * -sfr J confess to a desire to see a limited hoarding of 
money. But I want to see a hoarding of something that is a 
standard of value the world over. Silver is this. 

Our mines are now producing almost unlimited amounts 
of silver, and it is becoming a question, 'What shall we do 
with it?' I suggest here a solution which will answer for 
some years, to put it in circulation, keeping it there until it is 
fixed, and then we will find other markets." 

This may, to some extent, perhaps, explain how John 

Sherman and Hugh JVIcCuUoch became millionaires, and why 

Pobert Schenck was sent to the Court of St. James to teach 

the English people how to play " draw poker." However this 

may be, a cry went up from the people for relief. Agitation 

and discussion disclosed many of the frauds embodied in the 



120 PHILOSOPHY OF PEICE. 

acts of Congress, and through fear of poHtical destruction, on 
the 28th day of February, 1878, the standard silver doHar was 
rehabilitated with its legal-tender power, and the coinage of at 
least two millions per month was made compulsory. 

The act of May 31st, of the same year, forbade the further 
retiring of greenbacks. During this year business failures in 
the United States amounted to more than $23-1,000,000 — the 
most disastrous since the almost total extinction of values in 
1857, which was at that time produced from the same causes. 
We notice also that the aggregate of failures from 1866 to 1878 
amounted to the enormous sum of $1,784,394,132. During 
the years 1863-4-5, when we had an abundance of money in 
circulation, there were only 1545 failures, amounting to $34,- 
103,000, while during the succeeding eleven years of contrac- 
tion there were 67,422 failures, amounting to the vast sum 
given above. 

Who can examine these figures and not come to the con- 
clusion at once that contraction was the prime cause of these 
bankruptcies, and the governing factor in this wide-spread de- 
struction ? 

On January 1st, 1879, specie payment was resumed, and 
with it came the inevitable lessening of the means of payment. 
Although Congress had remonetized silver and ordered its 
continued coinage, each Secretary of the Treasury, in collusion 
with banks and bankers, has succeeded in keeping it out of cir- 
culation up to the present time. Eveiy document coming 
from the Treasury department has contained a carefully prepared 
paper upon the evils of silver coinage ; and the silver dollar 
that ought to be controlled by and belong to the j^eople, 
has never had a friend in any administration since. Every- 
thing is being done to add to the coinage of gold, Avhile every 
obstacle possible is thrown in the way of the coinage of silver. 

Congress passed an act permitting the issue of silver cer- 
tiiicates upon deposits of silver with the Tj-easurer, and after 



PRICE AND ITS RELATION TO BUSINESS. 121 

repeated insults from the banks, in a lucid interval, passed an- 
other act that no National Bank should belong to a clearing 
house that would not receive these silver certificates in settle- 
ment of balances. This law the 'New York and other banks 
in large cities have persistently ignored. In order to assist in 
the evasion of the law the Secretary of the Treasury resorts 
to the following scheme as shown by one of the leading jour- 
nals. The local editor of the ISTew York Tribune, a paper 
which has been distinguished for its zeal in supporting the re- 
fusal of the banks to receive silver certificates, gives in that 
paper of February 11th, the following account of the motives 
of the banks in seeming, on the 9th, to have relaxed in their 
exclusion of silver : 

"It is understood that the Monday payment by the Sub- 
Treasury was intended to accomj)lish two objects — to soothe any 
jealousy on the part of country banks and to enable the Sec- 
retary of the Treasury to answer satisfactorily the congress- 
ional inquiry whether any National Banks or clearing-house 
associations refused to accept silver or silver certificates. As 
the New York clearing house has now accepted silver in pay- 
ment of balances both it and the Sub-Treasury have complied 
with the Federal law. It is generally understood by bank 
ofiicers that payment in silver will not be repeated except in 
cases of emergency." 

In issuing bonds under the act of July 14, 18Y0, the 
United States took the risk of a rise in the value of both the 
metals. The parties accepting the bonds took the opposite 
risk of a fall in the value of either of them. The chances 
against the United States were wars and political disturbances 
in the mining countries, such as caused a decrease in the pro- 
duction of gold and silver between 1809 and 1848, or that the 
mines would be, from any other cause, less productive, or that 
countries not using gold or silver might decree their use as 
money, and thus make a new demand for them, or that a 
change of fashion might increase the consumption of the- 
metals in the arts. Either of these circumstances, or all com- 



122 PHILOSOPHY OF PRICE. 

billed, might raise the vahie of the metals very materially. 
On their part, those who accepted the bonds took the risks of 
an increased production of either or both of the metals by the 
discovery of new gold and silver mines, or by the more vigor- 
ous working of old mines, or that commercial countries Tnight 
demonetize one or hoth of the metals^ or that great amounts of 
gold or silver might be liberated by the suspension of specie 
payments in important countries, or that the habits of the 
world might be so changed that less amounts of gold or silver 
would be used for other purj^oses tlian as money. Either of 
these circumstances, or all combined, might depreciate the 
value of one or both of the metals very materially. 

One fact, not a matter of chance but of reasonable cer- 
tainty, operates steadily against the United States. This is the 
advance of the world in population, wealth, and exchanges, 
and the consequent requirement of more money, with no cer- 
tainty that the mines will produce more. 

The risks were and are mutual. Is it supposable that, 
upon the occurrence of any or all of the circumstances which 
would tend to raise the value of both metals, and thereby in- 
crease the burdens of the obligations payable in them, the 
United States would ask or that the bondholder would agree 
to a corresponding scaling of the contract? Has a bargain 
been made where the creditors, under all vicissitudes, stand to 
win and not to lose ? Is the United States bound to the obliga- 
tions and penalties of the contract, and debarred from all the 
advantages conferred by its terms? These interrogatories ad- 
mit of but one reply. 

There is no dispute about the facts of the case, or the 
law. A contract lias Ijeen entered into between the govern- 
ment and its creditors involving contingencies which may fa- 
vor either party, and both parties must abide the issue, M'hat- 
ever it may be. It would be beneath the dignity of the 
Government to demand any advantages of the Government 



PEICE AND ITS RELATION TO BUSINESS. 123 

which the law and the contract made under it do not confer. 
It would be a violation of justice and a betrayal of the great 
interests confided to its charge to accept anything less. The 
Government is an agent and not a principal. It is the trustee 
of the nation, and must find the charter and guide for the ad- 
ministration of the affairs intrusted to it in the law and not in 
sentimental emotions. 

The creditor would have no reason to complain of the law 
or the fact if he were now paid in silver. The contingencies 
which have happened have not been favorable to the United 
States, but otherwise. Not only has the value of both the 
metals risen, but a comparison of gold prices in 1870 with sil- 
ver prices in 1885 will show that the value of silver in buy- 
ing the products of labor is now greater than the value of 
gold was then. Payment to-day in silver would not only give the 
creditor all he is entitled to under the law and the contract, 
but would mete out to him more than equity would demand. 

It is sometimes said that the more recently issued bonds 
should be paid in gold, because the United States received 
gold for them. The obligations of a bond are not governed 
by the price or the species of money, or the nature of the con- 
sideration received by those who issued it. They are governed 
by the terms of the bond, and not by what it is sold for. A 
bond sold at 105 can have no other construction than a similar 
bond sold at 50, and a bond sold for gold can have no other 
construction than a similar bond sold for silver or greenbacks, 
or given in payment for supplies and services. The promise, 
and not the consideration, governs. If it were really true that 
what is received for bonds determines what they promise, the 
holders of a majority of the outstanding bonds of the United 
States would be in a much less favorable position than they 
now occupy. 

In consequence of this war on silver, a large sum lies idle 
in the vaults of the national Treasury, with a fixed determina- 



124 PHILOSOPHY OF PRICE. 

tion on tlie part of tlie Secretary and tlie Government tliat not 
one dollar sliall be paid for tlie redemption of bonds. The 
plea of unfairness is made, that silver has depreciated in value, 
and is now at a discount compared to gold. With a hundred 
millions or more of bonds subject to call, which should be 
paid, thereby putting into circulation the same amount of cur- 
rency, and reheving the ^Nation of the interest on that amount 
of bonds, all this vast sum is held idle in the Treasury because 
the bondholders control the administration. 

Let us go to the facts and ascertain whether these bonds 
can be honorably paid in silver. The law passed February 25, 
1862, provides that coin, and coin alone, shall be received for 
customs dues. That law has never been changed. It also pro- 
vides for the disposal of the coin so received as follows : 

"Section 3691-. — The coin paid for duties on imported 
goods shall be set apart as a special fund, and shall be applied 
as follows : 

First — To the payment in coin of the interest on the 
bonds and notes of the United States. 

Second — To the purchase or payment of one per cent, of 
tjie entire debt of the United States, to be made within each 
fiscal year, which is to be set apart as a sinking fund, and the 
interest of which shall in like manner be applied to the pur- 
chase or payment of the public debt, as the Secretiiry of the 
Treasury shall from time to time direct. 

Third — The residue to be paid into the Treasury. 

Since the passage of the above-mentioned act, millions of 
silver has been received into the Treasury from customs, and 
not one dollar of it applied, as the law directs, in the purchase 
or payment of bonds, while the act expressly provides for the 
payment of one per cent, each year, of the entire debt with 
this coin. 

In 1870, when our present bonds were issued, they were 

sold in accordance with the following act of Congress : 

" Chap. 2of). — An Act to Authorize the Refunding of 
THE National Debt. 

Be it enacted hy the Senate and House of Representatives 



PEICE AND ITS RELATION TO BUSINESS. 125 

of the United States of America in Congress assemhlecl, That 
the Secretary of the Treasury is hereby authorized to issue, in 
a sum or sums not exceeding in the aggregate two hundred 
milHon dollars, coupon or registered bonds of the United 
States, in such form as he may prescribe, and of denomina- 
tions of fifty dollars, or some multiple of that sum, redeemable 
in coin of the present standard valtie, at the pleasure of the 
United States, after ten years from the date of their issue, and 
bearing interest, payable semi-annually in such coin, at the rate 
of five per cent per annum ; also a sum or sums not exceed- 
ing* in the aggregate three hundred million dollars of like 
bonds, the same in all respects, but payable at the pleasure of 
the United States, after fifteen years from the date of their 
issue, and bearing interest at the rate of four and ahalf per 
cent per annum ; also a sum or sums not exceeding in the ag- 
gregate one thousand million dollars of like bonds, the same in 
all respects, but payable at the pleasure of the United States, 
after thirty years from the date of their issue, and bearing 
interest at the rate of four per cent per annum ; all of which 
said several classes of bonds and the interest thereon shall be 
exempt from the 23ayment of all taxes or duties of the United 
States, as well as from taxation in any form by or under state, 
V municipal or local authority ; and the said bonds shall have set 
forth and expressed upon their face the above specified condi- 
tions, and shall, with their coupons, be made payable at the 
Treasury of the United States. But nothing in this act, or in 
any other law now in force, shall be construed to authorize any 
increase whatever of the bonded debt of the United States." 

This is section first of the act approved July 14, 1870. 
Can language be plainer than this ? l^otice the express pro- 
vision, "redeemable in coin of the present standard value." 
What was the standard value of silver then ? 412 1-2 grains, 
the same as now. But for further proof I give below the exact 
wording of the hond itself This wording is on the original 
and all subsequent renewals : 

"This bond is issued in accordance with the provisions of 
. an act of Congress entitled ' An act to authorize the refunding 
of the national debt,' approved July 14, 1870, as amended by 
an act approved January 29, 1871, and is redeemable at the 
pleasure of the United States after the first day of July, 1907, 
in coin of the standard value of the Unitedj States on saAd 



126 PHILOSOPHY OF PRICE. 

July 14, 1870, loi^h interest in suck coin from tlie clay of the 
date liereof at the rate of four per cent per annum, payable 
quarterly, on the first day of October, January, April and July 
ill each year. The principal and interest are exempt from the 
payment of all taxes or duties of the United States, as well as 
from taxation in any form by or under state, municipal, or local 
authority. 

AVaslmigton, July 1, 1877." 

The act creating the bond, as well as the bond itself, specif- 
ically declares that coin of the standard value of 1870 shall be 
the standard of payment. The contract was changed in 1875, 
but restored to its original conditions in 1878. Since that time 
we have had a double standard of payment in fact, but only 
one in practice. From a recent report of the Secretary of the 
Treasury I clip the following : 

"Although the act of July 14, 1870, provides for the issue 
of United States bonds, '' redeeinable in coin of the present 
standard value,'' whereby were included both gold and silver 
coin of that value, yet as by the act of Feb. 12, 1873, the fur- 
ther coinage of silver dollars was prohibited, and the revised 
statutes declared gold coin only to be for sums exceeding five 
dollars, equity, if not strict construction of law, requires that 
the holders of such bonds should receive payment therefor in 
gold or its equivalent." 

The above statement of the Secretary of the Treasury 
falls flat when we consider the fact that the law of 1873 did 
not deiaonetise the silver dollar, but simply stopped its coinage. 
The act of June 22, 1875, sections 3585 and 3586 took from it 
its legal tender properties. 

Beginning with the date, June 22, 1875, and tracing the 
laws to February 28, 1878, when silver was remoiietized, the 
amount of bonds sold under the act referred to, was : 5 per 
cent bonds, due 1881, $156,216,950 ; 4 1-2 per cent bonds, due 
1891, $140,000,000. 

Of this amount the bonds due in 1881 have all been paid 
or reissued in some other form. Of the bonds due in 1891 
tliere isjonly about $128,000,000 outstanding. From these fig- 



PRICE AND ITS RELATION TO BUSINESS. 127 

ures we can discern the last flimsy foundation upon which the 
advocates of a single gold standard of payments base their 
arguments. 

Hon. Edwards Pierrepont, Attorney General of the Unit- 
ed States, and Minister to England, in a letter to the Hew 
York Times of April 18, 1884, says : 

"There is not an outstanding bond, coupon or greenback 
issued by the United States which may not be lawfull}^ paid in 
silver. Not one of them on its face or back, or in the statute 
authorizing the issue, or in declaration, or in resolution of Con- 
gress, has any proviso that they shall be paid in gold. And 
the act of Feb. 28, 18Y8, directing the coinage of silver dol- 
lars, declared that such dollars shall be a legal tender at their 
nominal value for all debts and dues, public and private, except 
where otherwise expressly stipulated in the contract." 

The most conclusive evidence of all is in the following 
resolution. This completely explodes the idea of a single 
standard of gold in payment for bonds. 

The following resolution passed the United States Senate 

January 25, 18Y8, and the House of Representatives January 

28, 1878, by a vote of 42 to 20 in the Senate and 189 to 79 in 

the House : 

"That all the bonds of the United States issued or author- 
ized to be issued under the said acts of Congress hereinbefore 
recited are payable, principal and interest, at the option of the 
government of the United States, in silver dollars of the coin- 
age of the United States, containing 412 1-2 grains each of 
standard silver ; and that to restore to its coinage such silver 
coins as a legal tender in payment of said bonds, principal and 
interest, is not in violation of the public faith nor in deroga- 
tion of the rights of the public creditor." 

It is both interesting and instructive to examine the list of 
those voting for and against the resolution then and note their 
positions at this time. 

Keither do I believe there is a bond or debt of any de- 
scription against this Government bearing interest, but can be 
called in at any time and paid. I hold it to be the duty of this 



128 PHILOSOPHY OF PRICE. 

Government to call in any of these bonds and rid the treasury 

of its snrphis in tlieir payment. What is the meaning of the 

following quotations, if it does not convey that power ? 

In the Credit-Strengthening act, passed March 18, 1869, it 

is provided as follows : 

"' But none of said interest-bearing obligations shall be re- 
deemed or paid before maturity, 'unless at such time United 
States bonds shall be convertible into coin at the option of the 
holder, or unless at such time bonds of the United States bear- 
ing a lower rate of interest than the bonds to be redeemed can 
be sold at par in coin." 

It may be urged that this language refers solely to the 
currency sixes. Granting this for the sake of argument, we 
find in Sec. 3,693 of the Revised Statutes the following pro- 
vision : 

" But none of the interest-bearing obligations not already 
due shall be redeemed or paid before maturity, unless at such 
time United States notes are convertible into coin at the option 
of the holder, or unless at such time bonds of the United States 
bearing a lower rate of interest than the bonds to be redeemed 
can be sold at par in coin." 

A recent writer says : 

"If this language means anything, it means that Congress 
then recognized the factt, which no one will seriously dispute, 
that the Government had the undoubted right to i)ay its bonded 
indebtedness at any time. But, owing to the peculiar condi- 
tion of the currency at that time. Congress provided by a sol- 
emn pledge that it would not exercise this right until the con- 
ditions named existed. Both conditions now exist. United 
States notes are exchangeable for coin at par, and bonds bear- 
ing a lower rate of interest than the bonds to be redeemed can 
be sold at par in coin. It follows that a strict construction of 
the law under which these bonds were issued fully warrants 
their payment at any time. If it is urged that it would cause 
loss to the holders of the I)onds; the answer is that such holders 
had full knowledge of the law, and also that the Government 
owes to the del)t()r class, and to the people generally, just as 
much care and tidelity as it owes to the bondholders." 

It is asserted in the Secretary's report ^that one of the con- 



PRICE AND ITS RELATION TO BUSINESS. 129 

sequences of the payment by tlie Government of all its debts 
in silver would be the impairment of the national credit, al- 
though no explanation is given how a refusal to pay gold can 
injure the character of a country which has never promised to 
pay gold, and which has a law on its statute-books admonishing 
everybody who deals with it that the standard silver dollar is, 
and shall be, a tender for everything which it owes, unless it is 
" otherwise expressly stipulated in the contract." 

The Economist says "nearly every nation on the face of 
the globe is indebted to us, and the result of an appreciation 
of gold is that we obtain a larger quantity of their commodi- 
ties " in settlement of our claims. 

H. H. Gibbs, an ex-governor of the Bank of England, 
says in an article in the British National Review for July, 1883, 
that the following ideas being precisely those of the Econo- 
mist, are constantly pressed upon the English public : 

"England is a creditor nation. The scarcity of gold has 
made that metal more valuable, and she must needs be the 
gainer by this, and must continue to be still, more the gainer if 
gold becomes scarcer still. Is it to be expected that she should 
throw away this advantage ? " 

The same reasons which make gold monometalism a favor- 
ite policy in England make it a favorite policy in every coun- 
try, and in every section of all countries in which the creditor 
classes are dominant. Quite as naturally it is not a favorite 
policy in countries and sections of countries which are heavily 
loaded with public, corporate and private debts. 

The honor of the Government was no more sacredly 
pledged to the bondholder, that the principal and interest of 
bonds issued under the act of July 14, 18Y0, should be paid in 
coin of the standard value of that date, than it was to the peo- 
ple that they should have the option and privilege of paying 
the bonds issued under that act in either of the classes of coin 
of the standard value of that date. There are two parties to 
these contracts, the bondholder on the one side and the masses 



130 1>HIL0S()1*HV OF PRICE. 

of tlie people on tlie other. Tlie rights of the one are as sacred 
as tlie rights of the other. 

Even Great Britain, for many years during the present 
century, paid the interest of its public debt, a large proportion 
of which had been contracted in coin, in inconvertible bank 
notes, whose depreciation sometimes reached as high as thirty 
per cent. While nearly all nations have, on various occasions, 
met their obligations in a money less valuable than they agreed 
to pay, the Government of the United States stands alone and 
pre-eminent in the generosity and in the folly of paying in a 
money more valuable than it agreed to pay. The only com- 
pensation which it lias received for the added burdens thrown 
upon its citizens by an over-performance of its contracts is the 
interested praise of those benefited, which is as insincere as it 
is interested. Those who obtain an unjust advantage have a 
real contempt, however concealed, for the w^eakness that con- 
cedes and allows it. That sensitiveness so morbidly manifested 
by some in respect to the estimation in which this Government 
may be held l)y its creditors, here and abroad, and tlieir indif- 
ference as to the estimation in which it shall be held by the 
great mass of its own citizens, instead of being the evidence of 
proper national pride, is an exhibition of weak and puerile 
vanity. That sentimental idea of honor Avliich recpiires the ab- 
rogation of the plain terms of a written contract by one of the 
parties to it, against its own interest and at the demand of the 
other party, while suited to youthful fancy, and refreshing in 
the pages of cheap literature, should lind no place in official 
interpretations defining the rights and duties of a nation under 
contracts whose written terms are so precise as to excliule im- 
plication, and were framed by eminent patriots who had the 
welfare of the nation always at heart. 

Senator Beck in a recent speech placed this idea in a con- 
vincing light : 

"There is no more effectual or pernicious nii'thod of con- 



PRICE AND ITS RELATION TO BUSINESS, 131 

tracting the currency than hj collecting by taxation a large 
sum in excess of the needs of an economically administered 
Government, and locking it up in the Treasury. Every dollar 
needlessly taken from the tax-payer, wrongfully deprives him 
of that much capital which he needs and labored to obtain, and 
when it is locked up, the circulating medium, which all the 
people want, is wrongfully withheld from them. The thief 
who steals and squanders an unneeded surplus locked up in the 
Treasury vaults would inflict less injury on the country and its 
business if the money he stole was put in circulation, than a Secre- 
tary who holds and hides in vaults currency which the people 
want and refuses to use it to pay the debts, especially interest-bear- 
ing debts, which the men who own this money owe. It is 
easy to raise a clamor about a surplus, but it will be more dif- 
ficult to explain to the people why such vast amounts of the 
money they have been so heavily taxed to furnish is lying idle 
in the overloaded Treasury vaults, and they deprived of its use, 
while interest is running against them on bonds which can be 
and ought to be paid. The idle money when paid out for in- 
terest on bonds would at once be released and restored to cir- 
culation." 

The Senator continues his remarks on this cpiestion fur- 
ther. He says : 

"If the gold mines of California and Australia had con- 
tinued to produce abundantly, and the Comstock lode and the 
Leadville mines had not produced silver, so that the market 
value of the two metals as bullion in London had been 
reversed, the argument could be made quite as plausibly that 
the silver dollar was the constitutional unit of value in 1870, 
which the bondholders have a right to demand. 

There is not an outstanding obligation of the United 
States, nor of any state, municipality, corporation, or individ- 
ual, which can not be legally and honorably discharged by the 
payment of the present standard silver dollar. What right has 
Congress to deprive the debtor of that right by adding more 
silver to the coin than he agreed to pay, or by stopping its coinage 
so that he can not obtain it ? It is as palpable a violation of 
a contract to increase the obligation of the debtor as it is to 
impair or reduce the standard value of the coin which the 
creditor stipulated in his contract should be paid to him, I 
repeat : Why should it be stricken down, or its purchas- 
ing power further increased 20 per cent, by adding 40, 50, or 
any other number of grains to its weight ? • In other words, 



132 PHILOSOPHY OF PRICE. 

why should every producer and debtor luive to give 20 per 
cent, more of the products of liis hibor to obtain either a new 
silver dollar or gold coin w^ith which to pay his debts than he 
does now, when he is already pajang his obligations according 
to the terms of his contract in a coin which will procure for its 
owner much more of all he needs than it would in 1870? It 
is only another phase of the constant struggle of the rich to 
grind the faces of the poor, and of the favored few to enrich 
themselves by class legislation. 

While no one can deny that every obligation of the Unit- 
ed States and every contract within our own borders can be 
discharged honorably with the j)resent silver dollar, we are told 
that our foreign obligations and relations are such that gold 
will be at a premium very soon, and we will be on a basis of 
degraded silver at once if we do not increase the weight or stop 
the coinage of silver ; that all Europe is horrified at our stupid- 
ity or dishonesty, or both. 

Fortunately the official reports overthrow all the reckless 
assertions of the gold worshipers. The Register of the Treas- 
ury (see report for this year, page 4), shows that out of $1,- 
071,460,262 registered bonds of tlie tJnited States outstanding 
only $11,927,900, or a little over one-tenth of 1 per cent, is 
held abroad, and of those which can be paid before 1892. for- 
eigners hold only $34,150, which is less than the interest on 
the money now lying idle in the Treasury for one day at 3 per 
cent, per annum. 

These facts, coupled w^ith the fact that our exports of 
goods exceeded our imports $130,000,000 this year, and our 
imports of gold exceeded our gold exports $18,213,804, an 
amount greatly exceeding all our bonds held abroad, settle the 
question. The falsity of the clamor about foreign complica- 
tions or gold premiums is made too apparent for any sensible 
man to be deceived by it. 

The press is filled with articles day by day which seek to 
make people believe that all other, nations have ceased to coin 
silver, and that we alone are stubbornly persisting in forcing it 
upon this country after it has been aliandoncd everywhere else. 

I propose to disprove these allegations by officially stated 
facts. The Director of the Mint in his last i-eport shows 
(pages 131, 132) that for the year 1884 the world's production 
of gold was $95,292,569; of silver, $115,147,878 ; and that 
$99,459,240 of gold was coined, while the coinage of silver last 
year amounted to $90,039,443, of which the United States 
coined $23,991,756 of gold, and $28,534,866 of silver. Other 



PRICE AND ITS RELATION TO BUSINESS. 133 

nations, therefore, coined in 1884 $61,504,577 of silver, show- 
ing that we are far from being alone in the coinage of that 
metal. England coined $3,204,824 of silver last jeax and $6,- 
201,517 the year before, to add to her stock which has been ac- 
cnmnlating for generations; while she has coined silver for 
India in the last three years to the value of $68,234,000. 

The workers for wages in England to-day get their pay in 
silver coin, and the question is never mooted by them as to the 
comparative bullion value of the silver and gold coin of that 
country. Even Germany, notwithstanding she pretended to 
have demonetized silver twelve years ago, coined in 1SS2 $6,- 
407,157 of it to add to her vast stock on hand ; her laborers are 
paid in it now. No complaint is made anywhere, here or in 
Europe, about silver coin except by the holders of our bonds, 
who seek to increase largely the purchasing power of gold, or, 
which is the same thing, reduce the value of all our property 
from 25 to 50 per cent, below its present value when tested by 
the single standard of gold, which they claim shall be paid by 
us to them and to them alone. They do not seek to establish 
the single gold standard, they say; they are bimetallists. 
They agree that silver is a legal tender for all debts and obli- 
gations of the Government, except those held by them. It is 
good enough to pay the laborer, the soldier, the sailor, in short, 
all who work for the United States, but they insist that it is 
dishonest in us to pay it to them, although their bonds and ob- 
ligations all show on their face that it is a legal tender in j^ay- 
ment of them all so long as it is coined of the standard value 
fixed by law, July 14, 1870, as it is now and always has been. 

Our dollar is more valuable than that coined by most of 
the other leading nations, France included, theirs bearing the 
relation of 15 1-2 to 1 with gold, while ours is 16 to 1. I need 
not repeat in detail what the official reports show in regard to 
the gold, silver, and paper currency of the several countries. 
It is sufficient to prove by them that while the difference in 
the market value of gold and silver in London operates to de- 
grade their silver coin more than it does ours, France and other 
countries maintain their silver and paper in all transactions, 
public and private, at par with gold under far greater difficulties 
than we have to contend with, no matter from what stand- 
point the comparison is made." 

All that is now, or ever has been necessary to keep silver 

where it belongs and in its proper ratio v/ith gold is for the 

officers of the Government to obey the law. Let them say to 



134 PHILOSOPHY OF PRICE. 

the bondholders, here is coined silver of the required fineness 
and weight ; take it in jiaynient for your bonds. It is all you 
can legally or morally avsk, as it is strictly in accordance with 
the bond you compelled us to give. When this is done, and 
these patriotic gentlemen known as the nation's creditors, are 
made to understand that in the near future they will be the 
owners of this tal)ooed silver dollar, the cry against silver coin- 
age will cease, and this howl about a buzzard dollar will be 
heard only as an echo from foreign lands. This war is not 
made against silver, but against the quantity of money in the 
hands of the people, and for the purpose of restricting the 
means of payment now within the reach of the debtor class of 
our citizens. When we understand this truth, alb the acts of 
Congress which have been directed by our moneyed men will 
be made plain. They want the volume of currency reduced, 
well knowing that the value of what remains will be enhanced. 
Tliere is another factor which has aided in the contraction 
of our currency, to-wit : The continued attacks upon it by the 
banks and capitalists, and their constant harping against the con- 
stitutionality of the legal-tender greenback. These persistent 
assaults upon the greenback led to a trial in the Supreme 
Court of the United States of the legality of their issue, with 
the following result as reported by the Associated Press : 

DECISION OF THE SUPREME COURT. 

"Washington, March 3, 1884. — A decision was rendered by 
the Supreme Court of the United States to-day in the long 
pending legal tender case of Augustus D. Jilliard vs. Thomas 
S. (xreemnan, brought here by writ of error from the Circuit 
Court of the United States for the southern district of New 
York. The question presented by this case as stated by the 
Court is, ' whether notes of the United States issued in time of 
war under acts of Congi-ess declaring them to be legal tender 
in payment of ])rivate debts, and afterward, in time of peace, 
redeemed and ])aid in gold coin at the treasury, and then reis- 
sued under the act of 1878, can under the constitution of the 
United States be legal tender in payment of such debts.' 



PRICE AND ITS RELATION TO BUSINESS. 135 

The Court is unanimonslj of opinion that the present case 
cannot be distinguished, in principle from cases heretofore de- 
cided and reported under tlie names of ' legal tender cases ' (12 
Wall 457) ' Dooly vs. Smith ' (13 Wall 604), ' railroad company 
'VS. Johnson' (15 Wall 195), and 'Maryland vs. railroad com- 
pany' (22 Wall 105), and all the justices except Justice Field, 
who adheres to the views expressed in his dissenting opinion 
in those cases, are of opinion that they were rightly decided. 
The Court holds, therefore, that Congress has power to issue 
obligations of the United States in such form and to impress 
upon them such qualities as currency for the purchase of mer- 
chandise and payment of debts as accord with the usage of a 
sovereign government. The power as incident to power of 
borrowing money, and issuing bills and notes of the govern- 
ment for money borrowed, of imposing upon those bills or 
notes the quality of being legal tender for the payment of pri- 
vate debts, was a power universally understood to belong to 
sovereignty in Europe and America at the time of the framing 
and adoption of the constitution of the United States. This 
power of making notes of the United States legal tender in 
payment of private debts being included in the power to bor- 
row money and to provide a national currency, is not defeated 
or restricted by the fact that its exercise may affect the value 
of private contracts. If upon a just and fair interpretation of 
the whole constitution a particular power or authority appears 
to be vested in Congress, it is no constitutional objection to its 
existence or to its exercise that property or contracts of indi- 
viduals may be incidentally aifected. 

The Court says in conclusion : 

Congress, as the legislature of a sovereign nation, being 
exjDressly empowered by the constitution to levy and collect 
taxes, to pay debts and provide for the common defense and 
general welfare of the United States, and to borrow money on 
the credit of the United States, and to coin money and regu- 
late the value thereof and of foreign coin, and being clearly 
authorized to coin as incidental to the exercise of those great 
powers, to emit bills of credit, to charter national banks, and 
to provide a national currency for the whole people in the 
form of coin, treasury notes and national bank bills, and the 
power to make notes of the government a legal tender in pay- 
ment of private debts, being one of the powers belonging to 
sovereignty in other civilized nations, and not expressly with- 
held from Congress by the constitution, we are irresistibly im- 
pelled to the conclusion that impressing upon treasury notes of 



13H PHILOSOPHY OF PRICE. 

the United States the qiiahty of being legal tender in payment 
of private debts is an appropriate means conducive and ])lainly 
adapted to execution of the undoubted power of Congress con- 
sistent with the letter and spirit of the constitution ; therefore, 
within the meaning of that instrument necessary and proper 
for carrying into execution the powers vested by this constitu- 
tion of the Government of the United States. 

Such being our conclusion in the matter of law, the ques- 
tion whether at any time in war or peace the exigency is such 
hy reason of unusual and pressing demands on the resources of 
the government or of inadequacy of the supply of gold and 
silver coin to furnish the currency needed for uses of the gov- 
ernment and of the people, that it is as a matter of fact -wise 
and expedient to resort to this means is a political question to 
be determined by Congress when a question of exigency arises, 
and not a judicial question to be afterward passed upon by the 
courts. It follows that the act of May 31, 1878, is constitutional 
and valid, and that the Circuit Court rightly held that a tender 
in treasury notes reissued and kept in circulation under that 
act was a tender of lawful money in payment of the defend- 
ant's debt to plaintiff. 

The judgment of the Circuit Court is affirmed. Opinion 
by Justice Gray, JusticeField dissenting. 

JUSTICE FIELD DISSENTS. 

Justice Field, in a long and carefully prepared opinion, 
dissents from the opinion of the Court and from all arguments 
advanced in its support. lie says : 

' If there be anything in the history of the constitution 
which can be established with moral certainty, it is that the 
framers of that instrument intended to prohibit the issue of 
legal tender notes both by the general Government and by 
states. The argument presented by the Court, and by advocates 
of legal tender, amounts to this : The object of borrowing is 
to raise funds ; the annexing of the quality of legal tender to 
notes of the Government will induce parties to take them, and 
funds will thereby be more readily loaned. But the same thing 
may l)c said of tlie annexation of any other provision which 
would ffive to the holders of notes some advantage, as for in- 
stance a ])rovision that notes of the Government sliould serve 
as a free ticket on pul)lic conveyances of the country, or give 
free ingress to places of amusement, or entitle him to a per- 
centage from the revenue of private corporations. The same 
consequence — a ready acceptance of notes — would follow, and 



PRICE AND ITS RELATION TO BUSINESS. 137 

yet no one would pretend that annexation of provisions of tliis 
kind with respect to propert}^ of others, over which the bor- 
rower has no control, would be in any sense an appropriate 
measure to the execution of power to borrow. There is no in- 
vasion by the Government of the rights of third parties which 
may not be thus sanctioned under the pretense that its allow- 
ance will lead to the ready acceptance of the Government's 
notes and produce the desired loan.' 

In conclusion Justice Field says : 

' From the decision of the Court I see only evil likely to 
'follow. If Congress has power to make notes of the United 
States legal tender, and to make them pass as money, it may be 
asked what necessity was there to invest it by the constitution 
with power to borrow money ? If it can make money, why 
borrow it? and if notes of the United States with the legal 
tender quality are money, or equivalent to money, why should 
Congress not at once issue a sufficient amount to pay all bonds 
of the United States? Why pay interest on ^1,000,000,000 
bonds when in one day it can make money to pay them ? It 
would not indeed surprise me if there be a call from many 
quarters upon the Government to issue such notes for bonds.. 
Who can object to it if the doctrine declared by the Court is 
sound? and why should there be any restraint upon unlimited 
appropriations by the Government for all imaginary schemes 
of public improvement if the printing press can furnish all the 
money needed for them ? ' " 

That Court, the highest authority in the land, declares in 
substance, first, that the Government has the power to issue 
legal-tender paper money, and second, that Congress is the sole 
judge as to when, and in what quantity it maybe issued. This 
decision is the end of the whole matter. It is final. We have 
now compassed the whole story of contraction, and from the 
facts given are prepared to judge of the conflict that began 
with the civil war and is raging at the present time. When it 
will cease and what will be the final result no man can predict. 
One thing, however, is certain. This concentration of values — 
this building up of giant monopolies — this increasing power of 
wealth over labor and its products, cannot continue many 
years and our nation remain a free Republic. 

I will now proceed to compare the volume of domestic 



138 PHILOSOPHY OF PRICE. 

ciiiTency in the hands of the people for the years 1866 and 
1885. There seems to be a difference of opinion among writers 
in rescard to these ratios. I have made a thorough investiga- 
tion of the pubhc records and have made my table from them 
alone. The task is a difficnlt one, but in a book of this character 
it becomes absolutely necessary. I have given the amount of cur- 
rency among the people each year. In doing so I have 
deducted from the gross amount of currency, all re- 
serves held in the United States Treasury and the banks. 
From 1875 to 1885 I have made a very conservative deduction 
for lost or destro^^ed currency. There has been issued and re- 
issued $1,640,559,947 of U. S. notes, and nearly double this 
amount of national bank bills. Of course there must have 
been a per cent, of this paper money as well as coin lost 
and destroyed. 

The public debt statement of June 30, 1866, was as fol- 
lows : 

Ten-forty 5 per cent bonds $ 171,219,100.00 

Pacific Bonds 6,042,000.00 

Five-tweny bonds due 1882-4-5 722,20o.500.00 

Six per cent, bonds due 1881 265,317,700.00 

Six per cent, bonds due 1880 18,415,000.00 

Five per cent, bonds due 1874 20,000,000.00 

Five per cent, bonds due 1871 7,022,000.00 

Temporary ten-day loan 120,176,195.65 

Certiticates of Indebtedness 26,891 ,000.00 

Six per cent, bonds due 1868 8,908,341.80 

Six per cent, bonds due 1867 9,415,250.00 

Compound notes 159,012,140.00 

Seven-thirty notes 806,251,550.00 

United States notes 400,891,368.00 

F'ractional currency 27,070,876.96 

Gold certificates 10,713,180.00 

Texas indemnity 559,000.00 

Bonds due and not in 3,815,675.80 

Totiil $2,783,425,878.21 

Cash in Treasury $ 132,887,549.11 

Amount and kind of currency June 30, 1866, was as fol- 
lows : 

One year notes of 1867 $ 8,908,341.00 

Two year notes of 1868 9,415,250.00 

Compound interest notes 159,012,140.00 



PJRICE AND ITS RELATION TO BUSINESS. 139 

Seven-thirty notes 806,251,550.00 

Temporary loan, ten days 120,176,196.00 

Certificates of indebtedness 26,391,000.00 

United States notes (greenbacks) 400,891,368.00 

Fractional currency 27,070,876.00 

Gold certificates 10,713,180.00 

National bank notes 294,579,315.00 

Total $1,863,409,216.00 

Amount and kind of currency June 30, 1886, was as fol- 
lows :, 

United States notes (greenbacks) | 346,681,016.00 

National Bank notes 277,847,168.00 

Gold and silver 820,998,837.00 

Total. 11,445,527,021.00 

Less reserves in banks and treasury f 727,122,021.00 

Less reserves in State Banks 125,000,000.00 

Less National Bank currency destroyed 15,000,000.00 

Less greenbacks destroyed 30,000,000.00 

Less gold and silver coins 15,000,000.00 

Total $ 912,122,021.00 

Leavina; in circulation | 533,405,000.00 

CIRCULATION PER CAPITA. 



Tear. 


Circulation. 


Population. 


Per Capita. 


1866 


1,863,409,216 


35,819,281 


$52.01 


1867 


1,350.949,218 


86,269,502 


37.51 


1868 


794,756,112 


37,016,949 


21.47 


1869 


730,705,638 


37,779,800 


19.34 


1870 


691,028,377 


38,558,371 


18.70 


1871 


670,344,147 


39,750,073 


16:89 


1872 


661,641,363 


40,978,607 


16.14 


1873 


652,896,762 


42,245,110 


15.45 


1874 


632,032,773 


43,550,756 


14.51 


1875 


630,427,609 


44,896,705 


14.04 


1876 


620,316,970 


46,284,344 


13.40 


1877 


586,328,074 


47,714,829 


12.28 


1878 


549,540,187 


48,935,306 


11.23 


1879 


534,424,248 


50,155,783 


10.65 


1880 


528,524,267 


51,660,456 


10!23 


1881 


610,633,433 


53,210,269 


11.48 


1882 


657,404,084 


54,806,577 


11.97 


1883 


648,205,895 


56,450,714 


11.48 


1884 


591,476,978 


58,144,235 


10.17 


1885 


533,405,001 


59,888,562 


8.90 



These amounts are taken from reports to Congress, and 
the returns are from those of the director of the mint and the 
Comptroller of the currency. They must, therefore, be con- 
sidered as authentic. A careful study of the above should con- 



140 PHILOSOPHY OF PKICE. 

vince any person of tlie justice of the cause I am pleading — 

more domestic currency for tlie people. 

Some, even now deny tliat the 7-30 bonds enterd into our 

circulating medium. Everyone in business at that time knows 

they did. And Treasurer Spinner in his report to Congress 

for the years 18C9 and '70 (page 244) heads the estimate of 

outstanding currency with a certain amount of 7-30 bonds. 

This autliority ought to settle the question. Others deny that 

there has been any contraction in our domestic currency, 

claiming there is as much money now as there ever was. To 

such I refer to the above table. That it has been the settled 

purpose of the Government for the past 20 years to contract 

the circulating medium to the lowest possible amount, I refer 

to the following extract taken from the report of Hugh Mc- 

Culloch, Secretary of the Treasury, to Congress in 1866, 

page 17 : 

"AnxioT^s as he (the Secretary) is to lighten the public bur- 
dens and reduce the pu])lic debt, he does not hesitate to say that 
these notes (legal tenders) should be withdrawn from circulation 
and that the furnishing of what paper currency may be re([uired 
be left to corporations. The reduction could be increased from 
four millions to six millions per month for the present fiscal 
year and to ten millions jier month thereafter." 

At the time of this reconnnendation, the only manner that 
these notes could be withdrawn was by purchasing them with 
interest-bearing bonds. Yet this profound financier was will- 
ing to burden the people with more del)t in order to hire the 
national banks to issue our currency. This idea has governed 
our financial system for the past 20 years, and is with us to- 
day. 

These tables show $8.90 per capita in circulation among 
the people at the present time ; and when we reflect that hard 
times compel wage-workers and producers to hoard their earn- 
ings, no matter how small the amount, we can readily sec that 
there is not over $5 per capita in actual circulation ; as a dollar 



PRICE AND ITS RELATION TO BUSINESS. 141 

laid away in a man's pocket is as snrely out of circulation as if 
it were in the bank. Hoarded money is as mucli out of circula- 
tion as though it remained in the mines. df 

In connection with the above figures I give the list of 
failures for each year named. From them will be seen the 
dreadful effects caused by a shrinkage in the circulating me- 
dium. "With contraction come failures in business as surely as 
night follows day. These figures speak with greater power 
and eloquence than I can find language to express. 

From 1866 to 1886, the failures in the United States num- 
ber 109,682, with Habilities amounting to $2,YM,525,880. 
Comment is unnecessary : 

In 186Y there were 2,Y80 failures ; liabihties, $ 96,666,000. 



In 1868 




2,608 






63,694,000. 


In 1869 




2,799 






75,054,000. 


In 18Y0 




3,551 






88,242,000. 


In 1871 




2,915 






85,252,000. 


In 1872 




4,069 






121,036,000. 


In 1873 




5,183 






228,499,000. 


In 1874 




5,830 






155,239,000. 


In 1875 




7,740 






201,000,000. 


In 1876 




9,092 






191,117,000. 


In 1877 




8,872 






190,669,000. 


In 1878 




10,478 






234,383,132. 


In 1879 




6,658 






98,149,053. 


In 1880 




4,735 






65,752,000. 


In 1881 




5,582 






81,155,932. 


In 1882 




6,738 






102,000,000. 


In 1883 




9,184 






172,874,172. 


In 1884 




10,968 






226,343,427. 


In 1885 




11,211 






267,340,264. 



From $52.01 per capita with 520 business failures aggre- 
gating $8,579,000 in 1864, we have reduced the amount in cir- 
culation to $8.90 per capita with a result of 11,211 failures 
amounting in the aggregate to $267,340,264 in 1885. What a 
record is this for the greatest, freest and most enlightened nation 
on earth ! What a record for a nation, possessing such bound- 
less resources of soil, mines, inventive genius and labor, with 



142 PHILOSOPHY OF PRICE. 

every facility to promote the happiness and prosperity of the 
people, is here chronicled ! What reasons can be assigned for 
the alarming fact^hat from 1806 to 1886, 109,682 of our iion- 
est, industrious business men were given over by law to a re- 
morseless financial destruction ? 

There are no reasons, founded in justice, or based on the 
correct principles of political economy, for the bankruptcies, 
ruin and almost constant business depression of the last twenty 
years in this countiy ; for, of all nations, ours should by right, 
be the most prosperous, and its people the most happy of any 
on earth. 

The effect of these different acts of Congress, alluded to, 
was to lessen the amount of the circulating medium, and by 
this contraction the value of labor and all its products was 
reduced. 

The proposition that the amount of an obligation does not 
consist in the number of dollars it contains, but in the ability 
to pay, is sound in all respects, and will hold good in public as 
well as private transactions. 

Yet, in all this legislation the people, who were the actual 
debtors, and owed the money, and from the products of whose 
labor it all must in the end be paid, were ignored, in the law, 
and their wants and rights overlooked. 

It is a well known trick of capital to appeal to the honor 
of the nation to place the credit of the nation above the credit 
of its people. What does it matter to me if our national bonds 
are §elling at a premium when my own debts on that account 
are unpaid and perhaps increased ? 

Capital — gold and silver — as an evidence of wealth, is al- 
ways the first to hide when there is any trouble, and the last to 
reappear and enter the field of traftic when the trouble is over. 

These acts of Congress were passed purely in the interest 
of parties who held our Government bonds, and those who 
possessed wealth in currency ; for by these very acts tlie differ- 



PRICE AND ITS RELATION TO BUSINESS. 143 

<ence between a paper and a gold dollar was added to tlie debt. 
By the first act, no one can dispute tliat 484 million dollars was 
thereby added to the debt and to the taxation of the people. 
By the two last, God only knows to what extent the amount 
was increased, and how far-reaching were their effects. 

Such, in brief, is the history of contraction. And in that 
shameless history we find the reason for all the widespread de- 
struction and want, bankruptcy and distress we now see on 
every hand. What is the situation of our people to-day in re- 
gard to national and other indebtedness ? Let us ascertain, if 
possible, — for the great mass of the people are anxious to know 
the cause of these hard times — wliy they can't pay their own 
debts ; why wheat, pork, beans, beef and all products are so 
low as not to. pay even a small profit ; why our national debt 
is virtually as large as ever. They know that a few years ago, 
with much less population than now, pork was worth ten dol- 
lars per hundred ; now it is selling for five. It takes as much 
labor to raise the corn and fatten the pork now as then. The 
grains of gold a.nd silver in the dollar remain the same now as 
then. Why is it that it takes twenty pounds of pork to buy a 
dollar now, when it took only ten pounds at that time ? Our 
mortgages and notes are tiie only things that seem to escape 
the general shrinkage. Can these questions be answered ? They 
must be. In 1866 we had $53 per capita in currency. We 
then had plenty of business, plenty of work ; tramps were un- 
known, and labor riots were yet to be seen. JSTow, after twen- 
ty years of contraction, we have less than $8.90 per capita in 
•circulation, with all business demoralized. Our land is filled 
with tramps, and strikes are the order of the day. 

In 1866 our national debt amounted to nearlj^ three bil- 
lions of dollars. ISTow it is about 1500 millions, or a little less 
than one-half the original amount. ISTearly 1900 millions have 
been paid in interest, but nevertheless, the debt is at present 
really as large as ever, judged by the ability of payment. It 



144 PHILOSOPHY OF PRICE. 

will take more pounds of the five great staples of this coun- 
try — wheat, iron, cotton, meat and wool — to pay what remains 
of the debt, at present prices, than it would to have paid the 
whole at the prices when the debt was contracted. A compar- 
ison of prices will prove this true. From it we gather the fol- 
lowing startling facts : 

Original debt, $3,000,000,000. Paid on debt, $1,300,000,- 
000. Paid in interest, $1,900,000,000. Total paid, 3,200,000,- 
000. "What remains will require more of labor and its products 
to pay than has been already paid, as before stated ; because 
prices have shrunk at least 65 per cent. Is not this statement 
plainly true ? If true, is it not, in the light of our present civ- 
ilization, disgracefully true? 

This process is technically known as making the dollar 
good, and it is all done in the interest of the workingman, " so 
that when he earns a dollar, he can buy a dollar's worth with 
it." Here is a table showing the debt of the United States on 
the first day of July, 1866 and 1884, including non-interest 
bearing greenbacks, expressed in dollars, and also in the things 
working folks have to produce in order to get the dollars with 
which to pay debts and interest : 

Debt in 1866. 1885. 

Dollars 2,773,000,000 1,830,000,000 

Beef barrels 139.000.000 135,000,000 

Corn bushels 2,000,000,000 3,000,000,000 

Wheat " 800.000,000 1,740,000,000 

Oats " 3,262,000,000 4,357,000,000 

Pork barrels 82,000,000 96,000.000 

Coal 'tons 213,000,000 400,000,000 

Cotton, bales 12,000,000 34.000,000 

Bar iron, tons 24,000,000 40,000,000 

Almost every product of labor shows the sanie result. "We 

paid, from 1866 to 1884, on the public debt: interest, $1,870,- 

000,000, and principal about 12 hundred millions, yet we find 

that what there is left of it, when measured by labor or the 

products of labor, is 50 per cent greater than the original debt. 

This is equally true with regard to State, city, corporation and 



PRICE AND ITS RELATION TO BUSINESS. 145 

private debts, which reach a sum estimated at twenty bilhons 
of dollars. 

Every honest man ought to know and feel that a national 
contract of this character, running as it does for a long term of 
years, should not be changed. The bonds in 1866 were paya- 
ble in lawful money, of which there was about 1500 millions 
used as domestic currency. The act of March 18, 1869, 
changed the contract between the people and the bondholders, 
and made the bonds payable in coin. At that time there was 
not a dollar of gold or silver in circulation. Both were at a 
premium of nearly 30 per cent. The acts of 18Y3-5 which de- 
monetized silver changed the contract again, and made the 
bonds payable in gold instead of gold or silver, and at this time 
neither gold nor silver was in circulation except at a premium of 
about 13 per cent. During the period from 1865 to 1873 pa- 
per money had appreciated from 46 to 88 cents on the dollar 
in gold. The act of 1875 fixed the date of January 1, 1879, 
as the time for resumption of specie payments. These four 
acts of Congress have no parallel in the history of the world. 
Other nations have been plundered by their rulers ; but never 
has a people been so wantonly robbed, so infamously cheated 
■of their hard earnings under the disguise of statesmanship be- 
fore. I^or have they allowed such brigandage of their rights 
to go unpunished. But here, in this country — a Republic — 
some of the very men who participated in this unrighteous 
proceeding have been kept continually in office by the people 
who have meekly borne the sufferings caused by their misgov- 
ernment. As Madame Roland said : " O ! Liberty ; what crimes 
have been committed in thy name ! " 

During all this time there has been a constant contraction 
of our currency. Its volume has grown less wdth each suc- 
ceeding year, and the price of labor and its products has in 
the same ratio declined, until there is scarcely a living profit in 
any legitimate business. The people are as anxious to gather 



146 PHILOSOPHY OF PRICE. 

riches as ever, but the laws of the Government regulating the- 
distribution of wealth are framed l)v the hand of moneyed 
men. This gives them power over labor, and they have used 
that power in a merciless manner. Hence the conflict between 
capital and labor. ISTo matter how nuich may be said about 
there being no antagonism or conflict between capital and la- 
bor; that their interests are identical, etc. I say there is a 
war, there always has been a war, and always will be a war, 
bitter and ugly between them. Their interests are not identical, 
but are diametrically opposed to each other. Money wants cheap 
labor and a dear dollar ; the toiler wants dear lal)or and a cheap 
money. How, then, can there be anything at best but an armed 
neutrality between them ? Each stands ready to take advantage 
of the other. Law seems to be the only regulator or arbiter of 
their diiferences. If labor can force a law that will reduce the 
abnormal and unjust profits of capital it will hasten to do so. 
If capital can enslave labor it does not hesitate or fail to make 
the point. For more than a century the laws of this nation 
have favored the rich. But since 1861 the whole machinery 
of government has been actually in their possession. Our 
Senators and Representatives in Congress, with very few ex- 
ceptions, become wealthy, perhaps millionaires, in a few years 
of service. All seem to fatten upon something — ^jplant grow- 
ing out of their official positions — intangil)le to the masses, but 
not difficult to name. The scrutiny of \\\q, people will soon 
disclose it. 

Every law that has passed Congress since 1861, regulating 
the financial condition of the Government and people, has 
been in favor of the rich and against the poor. Because of 
this, great monopolies have grown up. Immense corporations 
have sprung into existence and flourish. All business is done 
upon a scale that makes it impossible for the small dealer or 
tradesman to endure the competition and continue his business. 
Not only this, but farming is fast approaching the same condi- 



PKICE AND ITS RELATION TO BUSINESS. 147 

tion. Soon, unless these conditions change, our small farms 
will be a thing of the past, and a system of tenant farming will 
take its place. 

In view of the fact that the contract between the people 
and their creditors has been changed three times, and each 
time against the interests of the tax-payers ; that, owing to the 
righteons indignation of the sufferer, an act was passed giving 
back the silver dollar to the people, in part, with full legal 
tender qualities, would it not be fair and just to further benefit 
them by passing one more lavv^ restoring the original contract 
in letter and spirit to the nation ? 

Burke said (recognizing that there is a faith due to the 

people as well as to the holders of public securities) : 

"It is to the property of the citizen, and not to the de- 
mands of the creditor of the state, that the original faith of so- 
ciety is pledged. The claim of the citizen is prior in time, 
paramount in title, superior in equity." 

This astute English Statesman condenses the truth of the 
whole question in the paragraph- quoted. These measures were 
denounced by the best and truest men of our country, and their 
prophecies as to the consequences resulting from the enactment 
of the laws referred to have proved true. 

That a want of sufficient currency is the cause of distress 
and bankruptcy among nations cannot be denied ; and that a 
sufficient supply completely reverses this condition of affairs 
must be admitted, I will point to our own condition of finan- 
cial prosperity or adversity as the case may be, and quote 
from the history of other nations and from other dates to prove 
these statements true. 

On page 439 in the appendix, Bancroft cites the follow- 
ing intelligence from ISTew York, under date of June 4, 1785: 

"Thei'e is no trade with any but the British, who alone 
give the credit they want, and draw off all the bullion they can 
collect. They see no prospect of clothing themselves, unless 
they had the circuitous commerce they formerly enjoyed with 
Great Britain, which many think a vain expectation, now they 



148 PHILOSOPHY OF PRICE. 

are no part of the empire. The scarcity of moiiej makes the 
produce of a country cheap, to tlie disappointment of farm- 
ers and tlie discouragement of liusbandry. Thus the two 
classes of mercliants and farmers, that divide nearly all 
America, are discontented and distressed. Some great change 
is approaching." 

Beginning on page 355, Belknap particularizes some of 
the extreme measures which popular clamor and the severity 
of the emergency compelled several of the Legislatures to adopt, 
in an attempt to alleviate the intolerable situation of the com- 
munity. He says : 

"Similar difficulties at the same time existed in the 
neighboring State of Massachusetts, to remedy which, among 
other palliatives, a law was passed called a tender act, by which 
it was provided that ^executions issued for private demands 
tnigTit he satisfied hy cattle and other enumerated articles, at 
an appraisement of impartial tnen under oath.'' For such a 
law the discontented party in New Hampshire petitioned ; and 
to gratify them, the Legislature enacted, 'tliat when any debtor 
shall tender to his creditor, in satisfaction of an execution for 
debt, either real or personal estate sufficient, the body of the 
debtor shall be exempt from imprisonment ; and the debt shall 
carry an interest of six per cent., the creditor being at liberty 
either to receive the estate, so tendered, at a value estimated 
by three appraisers, or to keep alive the demand by taking out 
an alias, wdthin one year after the return of any former exe- 
cution, and levying on any estate of the debtor which he can 
find'. At the same time an act was made enlarging the power 
of the Justices of the Peace to try and determine actions of 
debt and trespass to the value of ten pounds. These laws were 
complained of as unconstitutional ; the former as being retro- 
spective, and changijig the nature of contracts ; the latter as 
depriving the creditor, in certain cases, of a right to trial l)y 
jury. But so strong was the clamor for redress of grievances, 
and so influential was the example of the neighl)oring State, 
that some of the best men in the Legislature found it necessary 
to comply, whilst another part were secretly in favor of worse 
measures." 

Belknap, on page 357, further said : 

"The scarcity of money was still a grievance which the 
laws had not remedied, but rather had a tendency to increase 



PEICE AND 'ITS EELATION TO BUSINESS. 149 

To encourage its importation into tlie country, tlie Legislature 
exempted from all port duties, except light-money, every vessel 
which should bring gold and silver only ; and from one-half of 
the duties, if a sum of money equal to one-half of the cargo should 
be imported. But it was to no purpose to import money, un- 
less encouragement were given for its circulation, which could 
not be expected whilst the 'tender act' was in force ; for every 
man who had money thought it more secure in his own hands 
than in the hands of others." 

Under date of September 20, 1786, Otto, the French Min- 
ister in New York, wrote home to his Government, as follows : 

"In the small state of Connecticut alone more than five 
hundred farms have been offered for sale to pay the arrears of 
taxes. As these sales take place only for cash, they are made 
at very low price, and the proprietors often receive not 
more than one-tenth of the value. The people feel the deadly 
consequence of this oppression, but not being able to discover 
its true cause, it turns upon the judges and the lawyers. In 
the States which have paper money, the rigor of the laws is less 
desolating for the former, since he can always get paper enough 
to satisfy his engagements ; and, besides, the creditors are less 
urgent." 

Beginning on page 35 of " The 'New Olive Branch," 

Mathew Carey says : 

"I have in 1T86 seen sixteen houses to let in two squares of 
about eight hundred feet in one of the best sites for business in 
Philadelphia. Real property could hardly find a market. The 
number of persons reduced to distress, and forced to sell their 
merchandise, was so great, and those who had money to invest 
were so very few, that the sacrifices were immense. Debtors were 
ruined without paying a fourth of the demands of their credi- 
tors. There were most unprecedented transfers of property. 
Men worth large estates, who had unfortunately entered into 
business, were in a year or two totally ruined ; and those who 
had a command of ready money quadrupled or quintupled their 
estates in an equally short space. Confidence was so wholly 
destroyed that interest rose to two, two and a half, and three 
per cent, per month. And bonds and judgments and mort- 
gages were sold at a discount of twenty, thirty, forty, and fifty 
per cent. In a word, few countries have experienced a more 
awful state of distress and wretchedness." 

Chief-Justice Marshall, taking a general survey of the 



150 PHILOSOPHY OF PRICE. 

situation tlirougliout the Confederation, says, in the fifth vol- 
ume of his " Life of Wasliington," beginning on page 88 : 

"In many of tliose states which had repelled every attempt 
to introduce into circulation a depreciated medium of com- 
merce, or to defeat the annual provision of funds for the pay- 
ment of the interest, the debt sunk in value to such a degree 
that those creditors who were induced by their necessities, 
or want of confidence in their rulers, to transfer their pu1)lic 
securities, were compelled to submit to a loss of from ten to 
sixteen or seventeen shillings in the pound. However unex- 
cej^tionable might be the conduct of the existing Legislature, 
the hazard from those which were to follow %vas too great to 
be encountered without an immense premium. In private 
transactions, an astonishing degree of distrust also prevailed. 
The hands of tiien whose comi^etency to jKiy their dehts %oas tin- 
quest ionaljle, coidd not he negotiated hut at a discount of 
thirty^ forty, and ffty jyer centym: real pro])erty teas scarcely 
vendible J and sales of any article for ready money could he 
made only at a rainous loss. The j^rospect of extricating the 
country from these emharrassments was hy no means flatter- 
ing. Whilst everything else fluctuated, some of the causes 
which produced this calamitous state of things were permanent. 
The hope and fear still remained that the debtor party would 
obtain the victory at the elections ; and, instead of making the 
painful effort to obtain relief l)y industry and economy, many 
rested all their hopes on legislative interference. The mass of 
national lahor, and of national loealth, was consequently di- 
minished. In every quarter were found those who asserted 
it to be impossible for the people to pay their public or private 
debts ; and, in some instances, threats were uttered of suspend- 
ing the administration of justice by private violence. Al)Out 
three hundred mutineers met near Exeter to break up the 
courts of justice ; but Governor Sullivan, a distinguished 
ofiicer during the war, instantly put himself at the head of the 
militia, dispersed the insurgents, and dispersed the chiefs of 
the revolt. The people of Connecticut have equally made 
some efforts for the abolishment of del)ts and breaking up of the 
courts of justice, but the vigilance of the Governor has thus 
far prevented any overt act. It must he agreed that these in- 
surrections are in great i^art due to the scarcity of specie."'' 

Minot, in his "History of the Insurrection in Massachu- 
setts," page 27, summing up the causes of public disorder, pro- 
ceeds as follows : 



PRICE AND ITS EELATION TO BUSINESS. 151 

"From the sliort view we have taken of the affairs of the 
Commonwealth sufficient causes appear, to account for the 
commotions which ensued. A heavy debt lying on the State, 
added to burdens of the same nature upon almost every incor- 
poration within it ; a decline, or rather an extinction, of public 
credit ; a relaxation of manners and a free use of foreign lux- 
uries ; a decay of trade and manufactures, with a prevailing 
scarcity of money ; and, above all, individuals involved in 
debt to each other, are evils which leave us no necessity of 
searching further for the reasons of the insurrection which 
took place." 

Henry Clay said : 

"The revulsions of 1837 produced afar greater havoc than 
was experienced in the period above mentioned. The ruin 
came quick and fearful. There were few that could save 
themselves. Property of every description was parted with at 
sacrifices that were astounding, and as for the currency, there 
was scarcely any at all. In some parts of the interior of Penn- 
sylvania, the people were obliged to divide bank notes into 
halves, quarters, eighths, and so on, and agree from necessity 
to use them as money. In Ohio, with all her abundance, it 
was hard to get money to pay taxes. The Sheriff of Muskin- 
gum County, as stated in the Guernsey Times, in the summer 
of 1842, sold at auction one four-horse wagon at $5.50; ten 
hogs at 6 1-4 cents each ; tw^o horses (said to be worth from 
$50. to $75. each) at $2. each ; two cows at $1. each ; a barrel 
of sugar for $1.50, and a 'store of goods' at that rate. In Pike 
County, Missouri, as stated by the Hannibal Journal, the 
Sheriff sold three horses at $1.50 each ; one large ox at 12 1-2 
cents ; five cows, two steers, and one calf, the lot at $3.25 ; 
twenty sheep at 13 1-2 cents each ; twenty-four hogs at 25 
cents for the lot ; one eight-day clock at $2.50 ; lot of ^tobacco, 
seven or eight hogsheads, at $5 ; three stacks of hay at 25 cents 
each." 

Also : 

"By the contraction of money in England, from 1816 to 
1825, more i\\2a\ four-fifths of the land owners were robbed of 
their estates, the whole number in the Kingdom shrinking 
from 160 thousand to 30 thousand." 

When Louis Phillippe, in 1848, escaped from his outraged 

people, the financial condition of the nation was about as bad 

as it could be compatibly with existence. 



152 PHILOSOPHY OF PKICE. 

The British Embassador wrote in March that year, as 
follows : 

"The scarcity of money became so great that a sovereign 
passed for four and forty francs. Many persons sent their 
plate to be coined into five franc pieces. It was melancholy to see 
the most civilized capital in the world suddenly reduced to the 
primitive conditions of barter." 

In December, 1848, the London Times, with its ordinary 
Delphic dogmatism, announced the inevitable failure of the 
French Eepublic and disintegration of French society in the 
near future, but so wise was the administration of the states- 
men of that nation that two months later the calumniator was 
forced to eat his own words, saying in his columns (The 
Times), February 16, 1849 : 

"As a mere commercial speculation with the assets which 
the bank held in hand it might then have stopped payment 
and liquidated its affairs with every probability that a very few 
weeks would enable it to clear off all its liabilities. But this 
idea was not for a moment entertained by M. D' Argout, and he 
resolved to make every effort to keep alive what may be termed 
the circulation of the lifeMood of the community. The task 
Avas overwhelming. Money was to i)e found to meet not only 
the demands on the bank, but the necessities, both public and 
private, of every rank in society. It was essential to enable 
the manufacturers to work, lest their workmen, driven to des- 
peration, should fling themselves amongst the most violent 
enemies of public order. It was essential to provide money 
for the food of Paris, for the pay of the troops, and for the 
daily sup]X)rt of the ateliers nationaux. A failure on any one 
point would have led to a fresh convulsion. But the panic 
had been followed by so great a scarcity of the metallic cur- 
rency, that a few days later, out of a payment of 26 millions 
fallen due, only 47 thousand francs could be recorded in 
silver. 

In this extremity, when the bank alone retained any avail- 
able sums of money, the Government came to the rescue, and 
on the night of the 15th of March, the notes of the hank were 
by a decree, made a legal tendei\ the issue of tliese notes being 
limited in all to 350 millions, but the amount of the lowest of 
tliem reduced for the pul)lic convenience to 100 francs. One 
of the great difficulties mentioned m the report was to print 



PKICE AND ITS RELATION TO BUSINESS. 153 

these 100 franc notes fast enough for the public consumption. 
In ten days the amount issued in this form had reached 80 
miUions. 

To enable the manufacturing interests to weather the 
storm, at a moment when all the sales were interrupted, a de- 
cree of the National Assembly had directed warehouses to be 
opened for the reception of all kinds of goods, and provided 
that the registered invoice of these goods, so deposited, should 
be made negotiable by endorsement. The bank of France dis- 
counted these receipts. In Havre alone eighteen millions were 
thus advanced on Colonial produce, and, in Paris, fourteen 
milhons on merchandise / in all, sixty millions were thus made 
available for the purposes of trade. Thus, the great institution 
had placed itself, as it were, in direct contact with every inter- 
est of the community, from the Minister of the Treasury down 
to the trader in a distant out-port. Like a huge hydraulic ma- 
chine, it employed its colossal powers to pump a fresh stream 
into the exhausted arteries of trade, to sustain credit, andwre- 
serve the circulation fronn complete collapsed — The Banh 
Charter Act, and the Rate of Interest, London, 18Y3, pp. 123-5. 

Sir Archibald Allison saw as clearly as the noon day sun 
the possibilities of such a calamity when he wrote, in 1852 : 

" Gold is a very good thing, and necessary for foreign ex- 
changes, but it is not worth purchasing by the ruin of the 
country. 

In every one of the great monetary crises which have oc- 
curred every five or six years during the last thirty, from 
$500,000,000 to $750,000,000 have been destroyed. Is the re- 
tention of gold worth purchasing at such a price ? 

It may be safely affirmed tliat if the requisite change is 
not made, the nation will continue to be visited every four or 
five years by periods of panics which will destroy all the fruits 
of former prosperity, and the people, like the unfortunate cul- 
prits who under the former inhuman system of military law — 
when sentenced to 1,000 or 1,500 lashes — were brought out at 
successive times to receive their punishment by installments as 
soon as their wounds had been healed in the hospital." 

The speech of General Gordon in the United States Sen- 
ate, devoted largely to the point that the disasters which had 
overtaken the business of the country were the direct results 
of the contraction of the currency, was promptly met with rid- 
cule and indifference. His argument was irresistible, notwith. 



154 PHILOSOPHY OF PRICE. 

standing : " In the discussion of this question no tongue is so 
eloquent as facts. As overtopping the eloquence of any man 
upon tliis subject — which reaches into all our homes — we of- 
fer the record of these melancholy years that cover the story 
of contraction. 

In tracing the story of bankruptcy and hard times during 
the decade from 1866 to 1877, the table we submit will be 
prohtable for instruction and reproof. The facts it sets forth, 
the business failures and business depression, bear the relation 
of cause and effect. Disaster grew with contraction, step by 
step. The woes that have fallen upon business have trod upon 
the heels of contraction of the machinery created for the con- 
duct of business with painful and unmistakable precision. The 
enormous remorseless contraction has done its work. The 
number of annual failures has increased from less than 500 to 
about 14,000, and the liabilities involved in these faihires have 
grown from nine millions a year to more than 300 millions. 
The table shows why : 

STATEMENT OF TKE PUBLIC DEBT OF THE UNITED STATES. 

Bonded debt, including Loans of various dates. Five-twen- 
ties, Ten-forties, etc.: 

June 30, 1866 $1,090,198,126 

June 30, 1867 1,439,838,676 

Juno 30, 1868 1,959,995,357 

June 30,-1869 2,031,684,235 

June 30, 1870 2,015,637,640 

June 30, 1871 1,967,076.167 

June 30, 1872 1,870,497,982 

June 30, 1873 1,825,335,077 

June 30, 1874 1,745,996.115 

June 30, 1875 1,783,245,331 

June 30, 1876 1,764,469,481 

June 30, 1877 1,714,479,682 

Circulating medium, including Treasury notes, gold cer- 
tificates, fractional currency, demand notes, United States 
notes, etc.: 

June 30, 1866 $1,693,379,753 

June 30, 1867 1,091,360,338 



PRICE AND ITS EP:LATI0N TO BUSINESS. 155 

June 30, 1868 676,126,507 

June 30, 1869 614,879,520 

June 30, 1870 479,420,378 

June 30, 1871 450,721,775 

June 30, 1872 433,386,848 

June 30, 1873 473,870,528 

June 30, 1874 510,511,248 

June 30, 1875 498,984,711 

■June 30, 1876 466,549,097 

June 30, 1877 477,445,221 

Annual contraction : 

June 30, 1867 $602,019,415 

June 30, 1868 415,233,831 

June 30, 1889 61,346,987 , 

June 30, 1870 135,459,147 

June 30, 1871 ; 28,698,603 

June 30, 1872 17,334,927 

June 30, 1875 11,526,537 

June 30, 1876 32,435,614 

During three years of tliis time there were temporary or 

accidental pauses in this policy of contraction, closing with the 

years as follows: 

June 30, 1873 $40,583,680 

June 30, 1874 36,640,720 

June 30, 1877 10,896,124 

The panic of 1873 compelled the chief variation from the 
otherwise uniform and pitiless ]3olicy. 

This is the record of contraction. What is the correspond- 
ing record of prosperity? The argument of facts must now 
Le heard. That country is prosperous in which every frugal 
and industrious man can pay his debts. Even the money-lend- 
er must admit this. But without discussion, let us place side 
by side the record of "prosperity" and the record" of contrac- 
tion. 

The era of abundant money began in 1862. The era of 
■contraction began in 1865-6. This is the accompanying busi- 
ness history. In 1863 there were but 485 failures in the Unit- 
ed States, with liabilities of but $6,864,700. In 1864 there 
were but 520 failures, with liabilities of but $8,579,000. In 
1865 there were but 530 failures in the country, and the liabil- 
ities involved were but $17,625,000. At this time, or a little 
before, contraction commenced the destruction of the business 



156 PHILOSOPHY OF PRICE. 

of the country, as shown above. The result has more than 

once been exhibited in detail. The annual number of failures 

has grown from 500 to 14,000, and the liabilities from $9,000,- 

000 to $330,000,000." This is the argument. 

In 1879 Thomas Ewing said: 

"Resumption does not mean the equalization of paper 
money with gold ; it means an addition of from 50 to 66 per 
cent to the burden of all debts and taxes to be paid by the 
people. Will the people permit adding to the burden of their 
taxes, their national, state, municipal, railroad and individual 
debts, not less than $5,000,000,000 by forcing prices down to a 
gold level ? Unless the demands of the people are complied 
with by the passage of some such bill as this, the whole re- 
sumption scheme will be smashed, even though some political 
parties may have to be smashed." 

In 1815 the war closed by the capture of Napoleon at 
"Waterloo. The scourge of war now being removed, it seems 
to have been thought that the country could endure without 
entire destruction a scourge far worse than the war ; and the 
Shylocks, with Sir Robert Peel at their head, or as an associate, 
began to insist strenuously upon a law for resumption of specie 
payments. And then what took place ? Let Thomas Double- 
day, in his financial, monetary and statistical History of Eng- 
land, tell. He says: 

"Prices fell on a sudden to a minous extent — banks 
broke — wages fell with prices of manufactures ; and before the 
year 1816 had come to a close, panic, bankruptcy, riot and dis- 
ajfectlon had spread through the land. Vast bodies of starving 
and discontented artisans now congregated together and de- 
manded reform of the Parliament. The discontents, as usual, 
the Governinent put dotvn by an armed force. As the mem- 
orable lirst of May, 1823, drew near, the country l)ankers, as 
well as the Bank of England, naturally prepared themselves by 
a gradual narrowing of their circ'ulation for the dreaded hour 
of gold and silver payments on demand. * * * The dis- 
tress, ruin and bankruptcy which now took place were univer- 
sal, affecting both the great interests of land and trade.'''' 

The great Scotch economist ai:d scientist, Professor Mo 

Culloch, says: 



PRICE AND ITS RELATION TO BUSINESS. 157 

" Thus it appears that, whatever may he the material of 
the money of a country, whether it consists of gold, silver, 
copper, iron, cowries or paper, and however destitute it may be 
of any intrinsic value, it is yet possible, by suflBciently limiting 
its quantity, to raise its value in exchange to any conceivable 
extent." 

The following tables of facts and results^ compiled from 

official statistics, tell a tale worth a dozen theories that panics 

and periods of good and bad times naturally follow each other 

like the troughs and waves of the ocean. "We give below the 

volume of money and results at certain dates : 

1811—$ 28.000,000 . . ! Hard times 

181&— 110,000,000 Good times 

1818— 40,000,000 Panic. 

1833— 60,000,000 Fair. 

1837— 150,000,000 Booming times. 

1848— 58,000,000 Panic. 

1847— 105,000,000 Good times. 

1857— 215,000,000 Booming times. 

1858— 150,000,000 Panic. 

1865— 1,651,282,373, failures 530 Booming times. 

1873— 738,219,749, " 5,183 Panic. 

1877— 696,443,394, " 8,872 Prostration 

These figures demonstrate that those who control the 
money volume control the times, as much as he who controls 
the helm controls the course of the ship. 

1 might quote similar statements from a hundred different 
works on money, but the ground is more completely covered 
by simply stating that 710 economist or scientist who has writ- 
ten on money for the past three-quarters of a century denies 
this truth regarding money — in fact, it is incontrovertible. 

I will quote from an article in the ]^ew York Tribune of 
late date in further proof of the propositions heretofore made 
in relation to the effect that the volume of money has on 
price. The dates given in the tables comprise the periods of 
contraction from 1865 to 1885. The results are obtained from 
the only fair method of computation and comparison that has 
yet been devised. A careful study of the figures given in 
these tables will be of service to the reader, and enable him to 
discover the causes operating to produce either financial dis- 



158 PHILOSOPHY OF PRICE. 

tress, or universal prosperity among the people. The quotation? 
is as follows : 

"It must snflice hero to state that quotations of about 200 
articles are compared since 1850, and the amount of money is 
ascertained which M'ould ])urchase at different dates of these 
various articles, quantities corresponding as closely as possible 
to their ascertained consumption in 1880, the date of the last 
census. Among tlie articles compared are wheat, corn, oats, 
rye. barley, beans and peas, mess pork, bacon, ham, live hogs, 
lard,' fresh beef, tallow, live sheep, poultr^^, Initter, cheese, 
eggs, milk, hay, potatoes, turni|)s, cabbage, onions, apples, 
raisins, sugar, brown and crushed ; molasses, coffee, tea, to- 
bacco, whisky, malt and hops, mackerel, codfish, salt, rice, nut- 
megs, cloves, pepper, cotton, print cloths and standard sheet- 
ings, wool of different qualities, blankets, car])ets, flannels,, 
leather, boots, shoes, hides, silk, India rubber, iron (pig and 
bar), nails, steel rails, coal, oil (crude and refined), tin and tin 
plates, copjK'r, lead, hemp, lumber, spruce and ])ine, oak, ash, 
walnut, and white wood, lath, brick, lime, turpentine, linseed 
oil, soap, glass, paper, white lead, and twelve other kinds of 
paints, fertilizers, and over fifty kinds of drugs and chemicals. 
Constant quantities of all the articles, proportioned as accu- 
rately as I am able to the quantities actually entering into con- 
sunqDtion in 1880, could luive l)een Ixuiglit at the quotations- 
on or nearest to the 22d for $74.50, and the same (piantities 
would have cost twenty years ago, November 1, 1805, no less 
than $174.7Y. 

A part of this change has obviously been due to the de- 
preciation in the value of the legal tenders, now equal to gold, 
but of which it took November 1, 1805, about $1.45 7-8 to 
purchase $1 in gold. But we have no right to assume that the 
prices of this ^'car measure the purchasing power of gold,, 
rather than the prices of May 10, 1882, wlien $100.59 was re- 
quired to purchase the same quantities of the same articles that 
cost in August last $74.50. Here has been a decline of more 
than $P»2 in the gold price of the entire list of connnodities, 
legal tenders having been ecpiivalent to gold for several years 
prior to 1882. The sums in currency which, from data thus far 
obtained, appear to be equivalent in purchasing power at dif- 
ferent ])erit»ds, selected to illustrate the extremes of upward or 
downward movements, are given in the first column of the fol- 
lowing table. It is proper to add that the completion of the 
iiKjuiry may warrant small changes in these figures, but proba- 



PEICE AND ITS RELATION TO BUSINESS. 



159- 



bly not changes of iipportance. In the second column is given 
the price of gold in currency the dates named, and in the third 
column the gold value of the snms in currency which appear 
to have had equivalent purchasing power at the different dates 
prior to resumption : 

COST OF CONSTANT QUANTITIES OF PEODUCTS AT DIFFEEENT DATES. 
PRIOR TO THE WAR. 



1860, May 1. 



Cost in 
Currency. 
.$100,00 



AFTER THE WAR. 



1865, Nov. 1 $174.77 

1866, May 1 157.60 

1866, Nov. 1 170.31 

1871, Nov. 1 122.03 



1872, 
1873, 
1874, 

1875, 
1876, 
1877, 
1878, 
1878, 

1879, 

1880, 
1881, 
1882, 

1883, 
1883, 
1884, 
1884, 
1885, 
1885, 
1885, 
1885, 
1885, 



THE PANIC RECORD. 

Mayl $137.13 

Nov. 1 115.14 

Mayl 122.77 



Pi'ice of 

Gold. 

$100.00 



$145.87 
125.13 
146.25 
112.00 

$112.50 
108.50 
112.87 

PREPARATION FOR RESUMPTION. 

Jan. 1 $113.01 $112.37 

Oct. 1 97.30 110.00 

Mayl 99 29 106.75 

Mayl 82.09 100.37 

Oct. 18 77.94 100.37 

RESUMPTION. 

Nov. 1 $ 93.48 $.... 

Jan. 1 103.42 

Jan. 1 95.98 

May 16 106.59 

THE RECENT DECLINE. 

March 13 $ 97.82 

Nov. 1., 88.71 

Jan. 1 88.37 

Nov. 21 78.47 

Jan. 1 79.66 

May 9 80.22 

Auo;. 22 74.56 

NoV. 1 75.35 

Close 78.53 



Cost in 

Gold. 

$100.00 

$119.81 
126.04 
117.82 
108.95 



$121.81 
106.01 

108.77 



$100.37 
88.45 
93.01 

. 81.81 
77.65 



It is not only clear from this comparison that the prices of 
1885 have been the lowest in our history for twenty-five years, 
but that there has been a general tendency toward lower prices. 
From 1866 to 1871, and again from 1872 until 1878, and again 
from 1882 until 1885, prices fell quite steadily. Indeed, had 
not the short crop of 1881 caused a temporary advance in the ^ 



160 PHILOSOPHY OF PRICE. 

spring of 1S82, the range of January, 1880, -would have been 
tlie highest of the later period, and it might have been said 
that tlie present era of declining prices had continued with lit- 
tle intermission for six years. None will fail to observe how 
swift and sharp the advances have beeit — al)0ut 12 per cent, 
from November, 1871, to May, 1872, and 25 1-2 per cent, 
from October, 1878, to January, 1880. But these spasmodic 
advances, by which the general tendency downward is inter- 
rupted, only serve to make it more clear that prices have been 
tending irresistibly toward a lower level than that of 1860, not 
only during the period of paper depreciation, but since gold 
has been the measure of value." 

One remarkable feature in this connection is that such an 
article should have ajDpeared in a journal making a bitter war 
on silver. If the above tables prove anything, they prove that 
gold has advanced in value 23.86 per cent, since 1860. There 
must have been a general decline in the price of all the prod- 
ucts of labor as well as in labor itself, or else an advance in the 
value of gold. Which is most reasonable ? Gold being a com- 
modity like all the other products named, it is not reasonable 
to presume that gold alone has remained unchanged. Besides 
this, a constant and lively competition has been going on for 
the purchase of this gold among the most powerful nations of 
the earth. England, France, Germany, the Netherlands, as 
well as America, have all struggled to obtain their share, and 
■ even more than the conditions of their commercial relations 
would admit. 

Statistics show that the supply of coined gold is being 
gradually encroached upon by reason of its increased uses in 
the arts — they show there is not gold enough in the world 
among civilized nations to pay 5 per cent, of their indebted- 
ness. Then, why should we ask, in the face of these facts, 
whether all other products had fallen in price, or gold appre- 
ciated ? Further, this comparative decrease in prices incident to 
an increase in the value of gold follows in direct ratio with 
the increase and decrease of the circulating medium. No 



PKICE AND ITS KELATION TO BUSINESS. 161 

stronger argument can be made, showing tlie truth of the last 
proposition, than the figures above quoted. Since 1866 prices- 
have fallen. This has been tlie general rule. During all this 
time the volume of money has been shrinking, and, as a nat- 
ural result, gold has appreciated in value — it having, by law 
and executive coercion, been made the basis of all paper circu- 
lation. 

The real cause of the present universal derangement of 
commerce and industry must be ascertained before the proper 
remedy can be devised. The causes assigned are various and 
contradictory. Many of them never had any existence in fact. 
Others are inadequate or absurd in themselves, or by reason of 
being confined to narrow localities or special interests, cannot 
have produced a mischief which reaches all places and all pro- 
ductive interests. 

Overproduction is one of those alleged causes, althouglr 
food, clothing, houses, and everything useful to mankind, are 
and probably always will be in deficiency as compared with 
the needs of them if the means were at hand to purchase. 
The constant effort of the human race is, and ought to be, to 
multiply production. The aggregate effective demand for 
products, that is to say, the aggregate demand accompanied by 
an ability to purchase, always increases with production. Sup- 
ply and demand mean substantially the same thing, and are 
nothing but two faces of the same fact. Every new supply of 
any product is the basis of a new demand for some other prod- 
uct. The capacity to buy is measured exactly by, the extent of 
production, when the medium of exchange is sufficient, and 
there is practically no other limit to' consumption than the 
limit of the means of payment. Overproduction of particular 
things may occur, but that is soon corrected by the loss of 
profits in their production. Overproduction in general and in 
the aggregate is impossible as far as the natural and positive wants 
of mankind are concerned. The contrary opinion will be held. 



162 PHILOSOPHY OF PRICE. 

only by tliose who regret tlie discovery of tlie steam-engine, 
the spinning-jenny, and the soM'ing and thresliing machines, 
and who believe that wliile mankind has tlie skill to devise 
methods of increased production they have no capacity to pro- 
vide for the distribution of industrial products. Production is 
the sole and only source of wealth, and in fact is but another 
name for wealth. Overproduction must therefore mean super- 
abundant wealth, and the idea that superabundant wealth or 
superabundant facilities for producing it can be the inciting 
cause of wide-spread povei'ty is repugnant to the common 
sense of mankind. All reputable authorities concur in treating 
the idea of overproduction as the idlest of fancies and wholly 
imworthy of serious notice. 

Too many railroads are said to have been built, when it is 
clear there is an urgent need for more. Undoubtedly a too 
rapid construction may create an abnormal demand for and a 
rise in the price of the special materials required in railroad 
building, and may possibly cause an abnormal advance of the 
interest on money by absorbing too much floating capital in a 
fixed form, but such evils are self-corrective. Railroad build- 
ing will always halt under such circumstances until the cost of 
materials and of capital ceases to be excessive. The tendency 
of industry to take profitable directions, and to withdraw from 
those found to be unprofitable, needs no other regulation than 
to be let alone. 

Money sunk in railroads prematurely built and at present 
unproductive, is another cause assigned for the existing condi- 
tion of things. But the loss resulting from labor misdirected 
is no greater than the loss resulting from the non-employment 
of labor. One single year of the loss now sustained through 
the stagnation of industry, caused by falling prices, is a 
calamity of greater proportions tlian the total loss from all the 
badly planned or unfortunate railroad enterprises of a decade. 
If it were really true that the labor lost in unproductive works 



PKICE AND ITS EELATION TO BUSINESS. 163 

is tlie cause, or one of the principal causes, of the present dis- 
tress, the future must be dark indeed for this country, which 
lias had an army of unemployed laborers since 1873 that is still 
being recruited as industries break down, one after another, 
under a shrinking volume of money and falling prices. If a 
few years of misdirected labor of 100,000 or even 500,000 men, 
has brought on conditions under which 3,000,000 are forced 
to be idle, the evils to come hereafter from the present idleness 
of that vast number must be incalculable and self-perpetuating. 
They must prove an endless chain freighted with a constantly 
accumulating volume of disaster, a Pandora's box with hope 
left out. 

That species of speculation in property and securities 
which is described as reckless and unsound, is said to be one of 
the causes of tlie present distress. But even in gambling, 
there can be no more lost than there is won, and the material 
damage to the connnunity cannot exceed the worth of the time 
of those engaged in it. The rating of property at higher or 
lower prices could not result in a destruction of the property, 
or even in the impairment of its productiveness. It would be 
deplorable if it were true, but happily it is wholly untrue, that 
the prosperity of the prudent and industrious is at the mercy 
of gamblers, of whatever species or degree. 

It is sometimes said that what is being witnessed is a com- 
ing down to solid bottom in prices. But the question of prices 
is a question of the standard in which they are measured. 
IVages at $2 per day, with a currency of gold and silver, are 
as much on solid bottom as they would be at a lower range 
with a currency of gold alone, and what are called bottom or 
bed-rock prices when the standard is gold, would in their turn 
be described as inflated if a new policy should decree that 
money should consist only of diamonds. Prices are nothing 
but the expression of the relation between money and other 
things, and in the end cannot express it otherwise than correct- 



164 PHILOSOPHY OF PRICE. 

ly, and when so expressed, prices are at the bottom wherever 
that may be, and the range of prices, whether higlier or lower, 
depending on the relation between the volume of money and 
other things. Money is bought with products. Products are- 
bought with money. An increase or decrease in the volume of 
either will raise or lower the price. 

It is maintained by many that existing evils are the results 
of a loss and lack of confidence, and that the sufficient remedy 
would be found in its restoration. On all occasions they por- 
tray in glowing phrase the abounding prosperity which would 
follow if moneyed and other capitalists would freely exhibit 
confidence by inaugurating industrial and commercial enter- 
prises. But it is to be observed that they content themselves, 
with recommending confidence to others, while they are care- 
ful not to make a practical exhibition of any on their own part. 
They seem, in short, to be unconsciously influenced by the 
view that while they might profit by the confidence of others, 
confidence on their own part might involve them in losses. 
The real mischief is not the lack of confidence, but the lack of" 
any legitimate grounds for confidence, and there neither will 
be, nor ought to be, any revival or extension of confidence, so 
long as the volume of money continues to shrink, and prices 
continue to fall. The word " courage " and not " confidence " 
should be used in this connection, for it implies the hardihood 
to face innninent and certain danger. Under existing condi- 
tions, if by any possibility confidence could be inspired, the 
consequences would be baneful rather than beneficial. 

Similar conditions to those which preceded the panic of 
1873, in the main, exist to-day. The volume of money is 
shrinking absolutely and relatively to other things, although 
perhaps not as rapidly as between 1865 and 1873, and the 
prices of property are gradually shriveling. Tlie principal dif- 
ference is, that since 1873, the credits extended by moneyed 
institutions have been largely curtailed or cut off altogether,, 



PKICE AND ITS EELATION TO BUSINESS. 165 

and consequently the material of which panics are made is not 
in as great abundance as then. The collapses which are con- 
stantly occurring do not make as much noise, nor attract as 
'much attention as the explosion of 1873, because they do not 
occur simultaneously and conspicuously with public institu- 
tions, such as banks, in 1873, but nevertheless they are con- 
.stantly taking place in all parts of the country, and in increas- 
ing numbers. All that is necessary to change this monotonous 
clatter of isolated collapses into a general crash is to restore a 
courageous confidence and credit without any change in exist- 
ing conditions. As the collapse of 1873 is generally attributed 
to an overextension of confidence and credit, a restoration of 
such confidence now, when the conditions are the same, must 
pave the way to a new collapse and would be placing dynamite 
for future explosions under the foundations of business. 

It is very necessary to understand in what- particulars con- 
fideuce has been lost before deciding that its healthy restora- 
tion is either possible or under existing conditions, desirable. 
It has not been lost in the intrinsic value of real estate or of 
any useful thing. It has not been lost in the fruitfulness of 
the soil, or in the ingenuity, industry, or integrity of the peo- 
ple, the stability of the Government, or in the productive 
powers of labor and machinery. Confidence has not been lost 
in anything except the possibility of maintaining prices while 
ihe volume of money is being shrunk by existing legislation. 
•Confidence has been lost in the idea that capital invested in 
productive enterprises can be returned with a profit, or even 
intact, to the investors. Its restoration while present condi- 
tions remain is impossible, and would work mischief if it were 
possible. 

It is stoutly affirmed by many that the present stagnation 
is the result of uncertainty as to the future value of the paper 
money of the country. If there were any such uncertainty, 
.and consequently, if there were possibilities of a rise as well 



166 PHILOSOPHY OF PRICE. 

as of a fall in j^nces, the adventurous temper of the business 
men and the people generally would cause active investments 
and pui'chases, as was illustrated during and immediately after 
the civil war, when such an uncertainty really existed. The 
true cause of the stagnation is to be found in the opposite fact. 
Instead of it being an uncertainty as to the future value of pa- 
per money, it is the absolute certainty that, under present leg- 
islation, paper money must still increase in value, and that 
prices must continue to fall. 

From the facts, figures and statistics given in this chapter 
we cannot shut our eyes to the truth that price is the controll- 
ing factor in business. There can be no business without it, 
and the greater the price the greater will be the aggregate of 
business done. We also learn that the relation existing between 
price and business is of such a character that both rise or fall 
together. The factor which commands and controls both is 
the volume of curreiicy. In a previous chapter I have shown 
very plainly that price depends upon the amount of currency 
in circulation in the nation where the price is established. I 
have shown in this chapter how business depends upon price, 
and that both are entirely dependent upon the amount of cur- 
rency in use. 

"As before stated, mc>?i6?/ is a standard of jyct-ynent, fixed 
and immutahle. You can, by changing the cpiantity of the 
money, or the quantity of the uses for the money, make it 
necessary for you to part with more of your labor or your prop- 
erty — to any conceival)le extent — in order to obtain a dollar, 
but when obtained it will not pay one whit more of your 
debts. By changing the quantity of the money ^ or hy omit- 
ting to increase it as the uses for it increase, yo\L change the 
price that can he had for your j^rojyerty or your lahor, hut you 
do not change the debtj that stands as fixed and unchanging 
as the north starP 




KIND AND AMOUNT OF CUEEENCY. 167 



CHAPTEE lY. 

KIND AND AMOUNT OF CUEEENCY. 

We want a currency thorouglilj American. One tliat 
will represent our peculiar American ideas and traits of cliar- 
acter. A currency that carries with its use independence of 
thought, coupled with that advanced and enlarged conception 
of social and business life now constituting the one great fea- 
ture of Americanism. There are but few things — in fact a 
full-fledged native American has but little in his composition — 
found in common with citizens of other countries. Our great 
lakes and rivers, our vast forests and broad prairies, our diver- 
sity of soil and climate, our high mountains and rich valleys, 
our enormous treasures in minerals, the constant push and hur- 
ry of trade — all conspire to broaden and deepen the minds of 
an American citizen upon all economic subjects far beyond 
that of any other nationality. "We, as a nation, have but little 
in common with the balance of the world that can affect our 
financial system or the measure of our productive industries 
that brains and energy cannot improve. We ignore their cus- 
toms, despise their laws and, as a rule, are indifferent to their 
teachings. In our national affairs our actions are governed — 
and almost everything is done — from our own concejDtions of 
justice and equity among the citizens of this Republic ; and 
we ask no concurrence in our measures by the balance of man- 
kind. We are a distinctive people, isolated commercially, in- 
dependent socially ; and by habit, thought and teaching are 



168 PHILOSOPHY OF PRICE. 

continually diverging from the beaten paths of other nations. 
Our ideas of trade and commercial intercourse with nations, 
colonies and dependencies are inimical to those of any other 
country. Being thus independent in almost every other re- 
spect, why should we not have a distinctive American system 
of currency ? Why should not this great and progressive Re- 
public take care of its own financial system, and have a cur- 
rency that will completely represent and promote the economic 
ideas of our own people. If other nations are not satisfied 
with it, and will not accept it, as reaching their conceptions of 
what a national currency should be, we are surely in a condi- 
tion to assume the responsibility of the issue. We are com- 
mercially, financially and intellectually qualified to stand the 
pressure of such national isolation. We forget that other na- 
tions have far more need of us than we have of them. We do 
not always remember that our products are only taken when 
they can be purchased the cheapest ; that prejudice, friendship 
and national lines are entirely lost sight of in the great strug- 
gle for commercial ascendency. 

All that the nations of Europe have done for us, by ex- 
ample and otherwise, has proven a positive injury and impedi- 
ment to our progress. Our very existence a3 a Government 
would be wiped out by them if it were possible. Why, then, 
should we be compelled to accept their system of currency ? A 
system fashioned and molded by the royal and aristocratic 
hands of kings, emperors and money-lords, to the end that 
equity and justice in commercial exchanges might be wrested 
from the producers of wealth. Such a system, if fully adopt- 
ed here and put into constant effect by the Government, would 
in time produce the same results as in Europe. Even now we 
are beginning to realize the existence of a similar condition; 

We want a circulating medium exclusively our own ; one 
that will not force itself beyond the boundaries of our own 
country. We do not want our money made of so valuable a 



KIND AND AMOUNT OF CUKKENCY. 169 

material as to be souglit for abroad. We want it kept in use 
at home, so that we may enjoy the benefits and reap the re- 
wards of its influence on the great business interests of our 
people. "We want much less talk about that impossible thing, 
" the money of the world," and much more action in regard to 
what shall be the money of America. 

It is not generally known that at the present time our 
Government has commissioned a gentleman to take in the 
^sights of the Old World, and, as he journeys along, ask such 
non-partisans as Gladstone, Bismarck and others, as to the wis- 
dom or unwisdom of continuing the coinage of silver. Such 
childlike simplicity in these times of intrigue and deception is, 
to say the least, refreshing. Of course, their advice, under tlie 
circumstances, would bear the stamp of disinterestedness. 
What a spectacle for 60 millions of intelligent people to wit- 
ness ! Where are our statesmen, our scholars and other men 
of brains? Are we bankrupt in that respect, or are they fol- 
lowing their plows and forging at their anvils ? The latter is 
probably true. 

We hear and read much concerning the stability of for- 
eign ideas regarding money ; that we must copy and endorse 
their customs and laws, or so much of them as affect our finan- 
cial condition. Were that the case, we would make a sorry 
mess of it. 

Professor Levi says : 

" Frightened, and not without reason, at the possible con- 
:sequences, some countries heretofore anxious to attract and re- 
tain gold in circulation, even at great sacrifices, showed a fever- 
ish anxiety to banish it altogether. In July, 1850, Holland de- 
monetized the gold ten-floi'in piece and the Guillaume. Por- 
tugal prohibited any gold from having current value except 
the English sovereign. Belgium demonetized her gold circu- 
lation (that is, repealed the laws making it legal money). Rus- 
sia prohibited the export of silver ; and France, alarmed but 
less hasty, issued a commission to look into the matter." 

In 1855 Germany demonetized gold, and made silver the 



170 PHILOSOPHY OF PRICE. 

only legal money. But in IS 70, after the silver mines had be- 
gun to issue vast sums of silver money, and the annual issue of 
gold money had declined from 146 millions to 98 millions, she 
demonetized silver and made gold the only legal money. 

I might give similar instances of fluctuations and changes 
in the views of European nations in regard to the use of the 
precious metals as money. From those given we learn that 
even those nations which have existed longest are not fully de- 
termined upon any fixed line of action. We infer from this 
that there is a probable chance for impi'ovement with them. 
Hence I claim as we are or ought to be a distinctive nation in 
nearly all that the term implies, an effort on our part to im- 
prove the methods of issuing a circulating medium would not, 
if disastrous, stand alone. 

In a literal sense every nation has a distinctive circulating 
medium and no other, for there is no such thing as " a money 
of the world " any more than there is a market of the world. 
Where the market or the money is found, it is evident that 
both or either exist under the laws and regulations governing 
traffic in each individual nation. What I intend to convey is, 
a currency not differing in its organic construction from that 
of other nations. Nothing could be more disastrous to trade 
and commerce than for all nations to adopt the same monetary 
system. What affected one, in such a case, would affect all. 

In Holland silver was the sole standard until 1816. In 
that year the double standard was adopted with the legal rela- 
tion between the metals of 15.873 to 1, which undervalued sil- 
ver and practically banished it from the circulation. In 1847 
silver was again adopted as the sole standard, not, as claimed 
by some, in consequence of the discovery of gold in California, 
but just before that event. The principal reason assigned by 
the statesmen of Holland for this change in 1847 was, that it 
had proved disastrous to the commercial and industrial interests 
of Holland to have a money system identical with that of Eng- 



KIND AND AMOUNT OF CUKRENCY. 171 

land, wliose financial revulsions, after its adoption of the gold 
standard, had been more frequent and more severe than in any 
other country, and wliose injurious effects were felt in Holland 
scarcely less than in England. They maintained that the adop- 
tion of the silver standard would prevent England from dis- 
turbing the internal trade of Holland by draining off its mon- 
ey during such revulsions, and would secure immunity from 
evils which did not originate in and for which Holland was 
not responsible. 

This proposition is undoubtedly sound, and is being so 
recognized by the best economic writers on both sides of the 
water. 

As the most important function of money is to measure 
values and to establish equities in time transactions, the great 
bulk of which are internal and between citizens of the same 
country, and all of which are expressed in the money of some par- 
ticular country, it follows that any system of money that is 
common to several countries is a vicious one, in that it subjects 
the entire internal business of each of them to all the disasters, 
originating in the political or financial mismanagement of the 
Government, or in the political disturbances, follies, misfor- 
tunes, or reckless speculations of the inhabitants, of any one 
or all of the others. That money is simply the instrument of 
commerce and industry and not their object ; that a sufficiency 
of it is better than more, and infinitely better than less ; that 
the outflow of money from one country to another having 
money systems in common, is a double injury. It is an injury 
to the country that receives it and a greater injury to the coun- 
try that parts with it. It tends in the one instance to produce 
crises by inflation, and in the other panics through contraction. 
And that in addition to this is an injury to each on account of 
the derangement of the trade of the other ; that their inven- 
tion of money is but half completed when the necessary lim- 
itations and regulations of its quantity, and consequently of its; 



172 PHILOSOPHY OF PKICE. 

value, are remitted not only to the vicissitudes and chances of 
mining, but to the vicissitudes in the business and legislation 
■of foreign countries ; that these facts and considerations, and 
many others which might be urged, show that metallic money 
is an inaccurate money, and fills only in a moderate degree any 
of the requirements of a perfect system, while, in essential 
particulars, it so far fails to fill them as to render it unfit for 
an advanced civilization. 

On the other hand, every requirement of a perfect system 
can be met more nearly and more certainly by paper money 
than by any other ever devised. Kot paper money based upon 
gold, silver, or any other fluctuating commodity, whose meas- 
ure it should be, nor upon a promise of commodities, near or 
remote, definite or indefinite, of governments or banks ; nor 
like the French assignats, based ujion lands ; nor fastened to 
gold or silver by a chain sure to snap when the metals are 
wanted ; nor convertible into bonds and thereby oft'ering the 
bribe of interest for its withdrawal from circulation ; nor of 
any use to its owner except when parted with ; nor capable of 
yielding profit except when employed in the production and 
distribution of wealth ; but an absolute money, whose value, 
conferred by the sovereign authority, and regulated by a pre- 
arranged and perfected system, and not by the passions and 
caprices of the hour, would rest impregnably on functions es- 
sential to civilization and progress. 

Bryant, in his discussion of the question, says : 

'* The poioer of money to fix the condition of man in all 
human affairs, is suprenie, absolute — soverei(fn. 

The condition, then, of those who gain the money must 
rise, wliile the eondition of those who lose it must sink — no 
alternative is possihle. Hence, to possess the money becomes, 
as it were, the life-and-deatli struggle of civilization — of man's 
existence. Now, it is ol)vious that, if the money of several 
nations he of the same kina — in fact or in principle — tlien this 
raercik'ss struggle for the iwoway—for existence — will be of 
^one nation against all the others, and of all against all. 

To make a money that is common to several nations is to 



KIND AND AMOUNT OF CURRENCY, 173 

set up a huge auction-block, upon which Prices will officiate 
as a heartless and soulless auctioneer. The money will be 
knocked down to those who bid the most for it — of their labor 
or its productions. 

The highest bidders for the money will ever be those 
whose necessities are the greatest. 

What the necessities of a people are, is largely fixed by 
the institutions — the government — under which they live. That 
great statesman, Lord Chatham, has most truly and wisely said : 
'The ruin or prosperity of a state depends so much upon the 
administration of its government, that, to be acquainted with 
the merit of a ministry, we need only observe the condition of 
the peopled 

If among these several nations having the same hind of 
money — in fact or in principle — there is even one nation whose 
institutions are such as enslave the masses to an aristocracy who 
own the capital and the land, then that curse spreads itself — 
inevitably — over all the other nations. The necessities and 
miserable condition of that people forces them to offer the 
most of their labor or its productions for the money. As the 
money flows to them their condition rises — they prosper. But 
those from whom it ebbs, sink, Nor can any human power 
arrest their sinking condition, until they have reached a point 
where their necessities make them the highest bidders for the 
money, A system of money common to several nations guar- 
antees two things : Fifst, that the condition of the producing 
and industrial classes will be about the same in each and all. 
And the condition of these classes fixes the condition of fully 
85 per cent of the total population. The condition of the 
manufacturer for home consumption, the merchant, the profes- 
sional man, etc., etc., sinks with the foundation. Second : It 
guarantees that no one of the nations will ever enjoy more 
than three or four successive years of prospei'ity. Their pros- 
perity is ever born of the dire necessity which forces them to 
bid the most for the money ; but in gaining it they reduce 
some other nation to adversity, which, in turn, bids it away 
from them again. It is a tide that ebbs and flows like that of 
the seas. In connection with this, it is of the highest import- 
ance to consider the following fact, namely : For each year 
of prosperity there will be four or five of adversity ; for a pe- 
riod of three or four years of prosperity there will be one of 
twelve to fifteen of adversity. The prosperity of ihefew years 
is due to the fact that the purchasing power or value of money 
is sinking, while that of labor and its productions are rising — 



IT-i PHILOSOPHY OF TRICE. 

less and less of labor and its productions going to tlie monej- 
loaner, and more and more to general society. The many 
years of adversity are due to tlie opposite fact — more and more 
of labor and its productions are required to cancel the demands 
of the money -loaner, and less and less are left to the patronage 
of general society. So that, while it is a system of money that 
sometimes bears upon the moiiey-loaner, we see that for each 
year of his adversity he is enriched by four or live of prosper- 
ity ; while general society has ji/oe of adversity to one of pros- 
perity.^ Society alioays gets into debt to the money-loaner 
when tJ^e value of the money is depreciated^ and is forced to 
go out of deht when its value is appreciated', when %t horrows 
two dollars it ohtains one day\s worh, and when it pays the 
tu)o dollars it gives two days'' loorh; and merchants and others — • 
supposed to be intelligent — sav that it is 'hard times.' The 
periods 1812 to 1816, 1834 to 1837, 1853 to 1857, in all a peri- 
od of eleven years, were ' good times ' — in each there was a 
great increase in the quantity of the money. From 1817 to 
1833, 1838 to 1852, and 1858 to 1872— but for the war— in all, 
a period of 4-1 years, were ' bad times,' — in each there was an 
enormous contraction of the money. It is four or five to one 
in favor of the money-loaner. And, as an inevitable conse- 
quence, that portion of society which produces all the wealth 
are largely bankrupts or paupers, while those who do not pro- 
duce a single farthing of it are largelfr millionaires. And all 
that portion of society subsisting between the money-loaner 
and the producer are ever seized with the ' chills and fever,' — 
a short season of feiier and a long one of chills^ 

1^0 matter how large or small the exchanges are between 
nations, the difference must be leveled up with commodities. 
The balancing commodity used may be either wheat, corn, 
meat, gold or silver ; yet, it must be paid out and received as 
an article of commerce having its value fixed by the nation re- 
ceiving it. Nothing American is money when taken from 
under the jurisdiction of the stars and stripes. All articles of 
commerce are then simply exported commodities, and are put 
upon the market at a price to be fixed by foreign purchasers. 
We arc told that gold and silver are the recognized money of 
the world. Tluit is an error. The gold and silver coins of 
one nation are received by another only as so much l)u]lii)n. 



KIND AND AMOUNT OF CURRENCY. 1Y5 

and its value is estimated by its weiglit and fineness. Wheat, 
cotton, meat and manufactured articles are used as the basis of 
more foreign exchange in one week than gold and silver is in 
a whole year. Gold, silver, copper and iron are the products 
of labor the same as all the other articles enumerated, and all 
nations, in their exchanges, treat them as such ; consequently, 
the domestic currency of a nation does not, in the least, con- 
flict with its foreign commerce. This being true, of what ben- 
efit is an exjDcnsive currency to any nation ? The more pre- 
cious tlie material the more expensive the currency. If gold 
was the only metal used for money, it would cost much more 
than silver, and if silver was the only metal used it would cost 
much more than gold, while paper costs comparatively noth- 
ing. The entire expense of a dear currency is made simply to 
gratify an exploded idea. Outside of the legal quality that 
goes with the stamp of the government is the guarantee that 
the metal U230n which it is impressed is of a certain weight 
and fineness. Of what use to the people, then, is all this ex- 
pense of coining gold and silver into money when it can be 
used as such only among ourselves ? "When used abroad it is 
weighed and bought as produce, notwithstanding its costly and 
handsome coinage. Why not keep it in bullion, and when an 
adverse balance is to be settled, send it in that |orm in payment 
of the difference, if required. 

As I said before, both gold and silver are too expensive 
for the uses they are put to as legal money. For instance, take 
a paper dollar and a gold dollar. Suppose both are lost at sea, 
what is the difference in the effect of their loss ? With the pa- 
per dollar the individual loses a dollar in value, and the nation 
gains it. With the gold dollar both the individual and the 
nation are losers — ^two dollars are lost, for the nation paid an 
equivalent for the metal before it was coined. This, of itself, 
amounts to a large sum in the course of years. Of the 45 
millions of fractional currency issued, 15 millions have been 



176 PHILOSOPHY OF PKICK. 

lost or destroyed. This would happen with silver or gold cer- 
tilicates in like manner — the nation would gain what the indi- 
vidual lost, instead of both being losers in the same calamity, 

I do not believe in deceiving the people in any manner, 
much less in regard to the great question of domestic currency. 
Squarely and honestly told, the only money in this nation to- 
day is gold and sih'er coin ; all else is a fraud, a delusion in- 
spired by undue confidence in a coin basis. N^ational bank 
bills are redeemable in greenbacks, and greenbacks are redeem- 
able in coin. ISTow, if the ^^cople should bring all their prom- 
ises to pay to the banks and treasuries of the United States, 
and demand their redemption at one time, the nation would 
suspend payment, become bankrupt, and the banks would 
prove insolvent. We are led to believe that there is a coin 
dollar back of each paper dollar that is in circulation. This is 
not true. National bank bills are redeemable in greenbacks. 
These banks had in circulation Oct. 1, 1SS5, $268,809,597. 
The amount of greenbacks outstanding at that date was $346,- 
681,016, making a total of $61 5,550,61 P.. To redeem this 
amount the Government held $100,000,000. Here is an exam- 
ple of 100 millions of money secured by a coin reserv^e and 
515 millions of absolute frauds. 

Ask one hundred men you may meet in your M'alk, if our 
currency national bank bills and greenl)acks have a coin reserve 
to protect their redemption, and ninety-nine will say they have. 
When,jn fact, the only issue that has an absolute coin basis is 
the certificates which are not legal tender. Domestic currency 
is one thing, but legal money is another. This paper money 
the Government and banks compel the people to receive in 
payment of all their dues, but the Government, under the 
present law, can only receive it from the people for certain 
S])ecified ])aymeuts, and for this reason I claim again it is a 
fraud. If an individual will not take his own debt in pay- 
incut for a credit he holds, plain p('()])lo will call him a scouu- 



KIND AND AMOUNT OF CURRENCY. 177 

drel, and justly, too. All tliis masquerading; and financial jug- 
glery is concocted simply to deceive a trusting people, with the 
object of robbing them of their earnings. Why not present 
the bare facts, cut the matter open, and let the light of wisdom 
and common sense in to dispel the darkness ? 

I would have gold and silver, if they are to be used as 
money, coined free and unlimited, or gold and silver certifi- 
cates issued on bullion deposited at any of the mints or sub- 
treasuries, equal to the amount of coin, and in convenient de- 
nominations for circulation. That much currency would be 
bottomed on the precious metals. Then I would issue Govern- 
ment notes or greenbacks in sufiicient quantities to give the 
people currency enough to keep capital, labor and its products 
independent of each other, and bottom this issue on taxation. 
Let the Government pay it to the people for what it wants of 
their labor, and products, and receive it of the people for all 
dues. With such a currency there could be no deception nor 
dejDreciation. 

I quote from Thomas Jefferson on this question : 

"And so the nation may continue to issue its bills as far 
as its wants require and the limits of its circulation will permit. 
Those limits are understood to extend with us at present to 
$200,000,000, a greater sum than would be necessary for any 
war. But this, the only resource which the Government could 
command with certainty, the States have unfortunately fooled 
away, nay, corruptly alienated to swindlers and shavers, under 
the cover of private banks. Say, too, as an additional evil, 
that the disposal funds of individuals to this great amount 
have thus been withdrawn from improvement and useful enter- 
prise, and employed in the useless, usurious and demoralizing 
practices of bank directors and their accomplices. In the war 
of 1755 our State availed itself of this fund by issuing a paper 
money bottomed on a specific tax for its redemption, and to in- 
sure its credit, bearing an interest of 5 per cent. Within a 
very short time not a bill of this emission was to be found in 
circulation. It was locked up in the chests of executors, guar- 
dians, widows, farmers, etc. We then issued bills bottomed on 
a redeeming tax, but bearing no interest. These were readily 



178 PHILOSOPHY OF PRICK. 

received, and never depreciated a single fartliiiii!;. — Opinions 
of Thovuis Jefferson in 1813; his letters to John W. Epps^ 
June '24, 1813 ; Jefferson's Worl's, volume 4, pages 4(>, 41. 

The question will be asked, and ought to be looked at, 
what is to be the recourse if loans cannot be obtained 'i There 
is but one — '-'■Carthago delenda estP Bank paper must be 
suppressed, and the circulating medium must be restored to 
the nation to whom it belongs. It is the only fund on which 
they can rely for loans ; it is the only recourse which can never 
fail them, and it is an abundant one for every necessary pur- 
pose. Treasury bills, bottomed on taxes, bearing or not bear- 
ing interest, as may be found necessary, thrown into circula- 
tion will take the place of so much gold and silver, which last, 
when crowded, will find an efflux into other countries, and 
thus keep the quantum of medium at its salutary level. Let 
l)anks continue, if they ])lease, but let them discount for cash 
alone or for Treasury notes." — Letter Sepjteniher 11, 1813, vol- 
ume 6, pages 199, 200, 201. 

Bear in mind the first issue of our greenbacks was upon 
this identical plan. They were received and taken for all dues, 
and in consequence remained equal with gold and silver, while 
those subsequently issued under a law discriminating as to 
their uses, to a large extent depreciated in value. Or, if this 
will not do, I would demonetize both gold and silver, and issue 
all the currency direct from the Government in legal tender 
notes. For my part, I am inclined to the latter idea. It would 
avoid confusion and decei^tion regarding the true status of our 
currency, and make it unnecessary to further discuss the ques- 
tion of a single or double standard of payments. It would en- 
tirel}^ eliminate the little understood question of a ratio be- 
tween the two metals, and give us a currency that could not be 
increased or decreased in value only by limitation in quantity, 
wliifh legislation could regulate. Every nation of the world 
is, at the present time, trying to solve this greatest factor in 
Iniman progress — the best currency. And I expect to live to 
sec the time when silver and gold will be considered, by all stu- 
dents of political economy', as unfit for money — as sinq)ly a 
commodity of considerable intriiisic value; and the cheapest 



KIND AND AMOUNT OF CUEKENCY. 179 

<.)!' all materials — paper — solely used to bear the stamp of pow- 
er or governmental authority, which alone mahes money. 
Then each Government w^ill have its one distinctive currency, 
that cannot be impaired or depreciated by the financial or com- 
mercial success of any other country. 

T here quote from the report of the Silver Commission : 

"Describing our situation summarily, it may be said that 
our commercial intercourse with Western Euro]3e consists of 
tM^o jjarts : 

First, the export of articles indispensable to Europe, such 
as cotton, the cereals, tobacco, and the products of animals, a 
trade which needs no stimulation or favor of any kind. 

Second, the import from Europe of manufactures. This 
is a trade which all parties and the representatives of all shades 
of economical opinion in this country wish to see steadily di- 
minished and eventually terminated. The reasons which con- 
duce to this uniformity of desire are very diverse, as also are 
the modes proposed to accomplish the object souglit. Some 
propose protective tariffs and high duties as the best means. 
Others maintain that the better if not the only way to keep 
out European manufactures is by the production in this coun- 
try of superior articles at lower prices, and that this is only 
j)ossible with free trade or simply a revenue tariff and cheap 
raw material. But, by whatever way it may be reached, a dim- 
inution, tending always to an extinction of imports from Eu- 
rope, is universally desired in this country. 

It is in trade with other parts of the world, in less ad- 
vanced stages of civilization, or with essentially different sys- 
tems of civilization, or with essentially different raw products 
resulting from marked diversity of climates, that we find the 
natural outlets for our manufactures, and in many cases the op- 
portunity for a mutually advantageous exchange of native pro- 
ductions. It is not perceived that that trade can become too 
large. All interests and opinions favor its expansion, and, un- 
like the trade with Western Europe, its existence and extent 
depend upon the wisdom and vigor of our efforts to secure and 
increase it. Our trade with England would be but little affect- 
ed if we should be entirely passive in relation to it. With 
China, on the other hand, we have no trade which we do not 
actively seek. Commercial nations will seek after our trade. 

We must ourselves seek after trade with the non-commer- 
cial nations. 



180 PHILOSOPHY OF PRICE. 

It is by no means clear that trade between nations is either 
increased or faciUtated by a concurrence in their standards of 
money. But even if it were so, the double standard would 
meet all requirements better than the single standard. It would 
tend to keep constantly available a sufficient stock of both met- 
als for the trade of either gold or silver standard countries. 

However it may be in respect to trade with non-commer- 
cial countries, it has never been shown that diversities of mon- 
ey, however arising, wlicther from single standards of a differ- 
ent metal, or from systems of irredeemable paper currency, are 
any hindrance to trade between commercial countries. What- 
ever the moneys of such countries may be, they are always in- 
terconvertible at known and not widely-variant rates. There 
is no property on sale in London for which the holder would 
refuse payment in silver or in greenbacks at the current rates 
of exchange ; and there is no property on sale in New York 
for which the holder would refuse payment in Bank of Eng- 
land notes at the current rates of exchange. Greenbacks are 
not a legal tender in London. Silver is not a tender there. 
Neither are American gold eagles, and botli greenbacks aiul 
silver are as readily convertible into sterling money as gold 
eagles are. The irredeemable paper currency existing in this 
country since 1862 has not obstructed its European trade in 
any degree whatever. The trade of England with connnercial 
countries was not obstructed when it had an inconvertible pa- 
per currency from 1797 to 1821. The ])aper moneys of Rus- 
sia, Austria, Italy, France and Brazil, altliough differing great- 
ly in their value relatively to gold and silver, are no hin- 
drances to their trade with each other, with tlie United States, 
or with European countries having metallic standards. Various 
nations in Europe, in close proximity to each other, or having 
large intercourse with each other, have had different single 
metallic standards, without experiencing any inconvenience 
from that circumstance. The single silver standard existed in 
Holland from 1817 to 1875, and in Germany from 1857 to 
1871, but the large trade of both with England, having a sin- 
gle gold standard, was carried on during those periods with 
undiminished facility. 

The long and still continuing difference of currency be- 
tween England and its greatest dependency, India, is a striking 
illustration of the fact that trade ])etween distinct peoples is 
not obstructed by the difference in their money standards. 
Both are parts of one em]ure, and the coinages of both are im- 
pressed with the head of the same ruler, but the Britisli sover- 



KIND AND AMOUNT OF CURRENCY. 181 

eign is not a good tender for a debt in Calcutta, nor is the 
Indian rupee a good tender for a debt in London. Cases are 
said to liave occurred of such extreme financial pressure in 
both those cities that loans of money, that is to say, silver, have 
been refused at Calcutta on a pledge of sovereigns, and that 
loans of money, that is to say, gold, have been refused in Lon- 
don on a pledge of rupees. No difficulty has ever arisen in 
the immense trade between Great Britain and India from this 
difference of currencies, although this is doubtless due in part 
to the exceptional circumstances which have given to England 
a large and constant supply of silver, notwithstanding that its 
standard money is gold. 

A fact, less striking in some aspects, but more so in oth- 
ers, is the difference in the actual currencies of the Atlantic 
and Pacific States of this Union. The difference is not made 
by law, but is a matter of choice on the part of the people of 
the Pacific slope. They judge that it has advantages for them, 
and both they and the people on the Atlantic perceive that it 
is not in the least degree obstructive to their mutual inter- 
course. There is no more difficulty in translating the green- 
back prices of J^ew York into the gold prices of San Francis- 
co, than there is in translating pounds avordupois into French 
kilograms. 

A distinguished writer, J. E. Cairnes, professor in the 
University College of London, in a recent work (1871) on Po- 
litical Economy, says: 

' It appears to me that the influence attributed by many 
able writers in the United States to the depreciation of the pa- 
per currency, as regards its effects on the foreign trade of the 
country, is, in a great degree, purely imaginary. An advance 
in the scale of prices, measured in gold, in a country, if not 
shared by other countries, will at once affect its foreign trade, 
giving an impulse to importations, and checking the exporta- 
tion of all commodities other than gold. A similar effect is 
very generally attributed by American writers to the action on 
prices of the greenback inconvertible currency. But it may 
easily be shown that this is a complete illusion. Foreigners do 
not send their products to the United States to take back 
greenbacks in exchange. The return which they look for is 
either gold or the commodities of the country ; and if these 
have risen in price in proportion as the paper money has been 
depreciated, how should the advance in paper prices constitute 
an induceiiient for them to send their goods thither ? The nom- 
ii]al gain in greenbacks on the importation is exactly balanced 



182 riiiLosoriiY of pkice. 

by the iioiniiial loss when those greenbacks coiuc to be convert- 
ed into gold or commodities. The gain may, in particular 
cases, exceed the loss, but, if it does, the loss will also, in other 
cases, exceed the gain. On the whole, and on an average, they 
cannot but be the equivalents of each other.' " 

The nations of Europe are not prepared to decide whether 
gold or silver is preferable for money. Centuries of study 
and experience does not appear to solve the question. The 
general money system of Europe had been that of the double 
standard until 1873. The conspicuous exceptions were Hol- 
land, which had been during much the larger part of its histo- 
ry a single silver standard country, and England, which had 
adopted the single gold standard, in 1816 by law, and in 1821 
in fact. In consequence of the apprehensions of a fall in the 
value of money, or, what amounts to the same thing, a rise in 
wages and the value of property, excited by the Californian 
and Australian yield of gold, Belgium adopted a single silver 
standard in 1850, and the German States in 1857. Belgium, 
however, returned to the double standard in 1861. 

Germany and the United States demonetized silver in 
1873. At that time it was neither depreciated nor unsteady in 
value, nor had any change occurred in the relative production, 
consumption or distribution of the precious metals to indicate 
its depreciation in the future, nor was any actual or probable 
depreciation assigned as a reason for its demonetization. The 
average flow of silver to India was undisturbed, and the big 
Bonanza in the Comstock lode was undiscovered. Manifestly, 
the real reason for the demonetization of silver was the a])pre- 
hension of the creditor classes that the combined production of 
the two metals would raise prices and cheapen money, unless 
one of them was shorn of the money function. In Europe, 
this reason was distinctly avowed. Tliis is no doubt the true 
reason for all this outcry against silver. The war against it is 
not made to destroy its commercial value, but to destroy its use 
as money, and thereby to lessen the volume of circulating me- 



KIND AND AMOUNT OF CUKRENCY. 183 

diuni. Evidence like this ought to he sufficient to condemn 
both metals as a basis for currency. 

A transition in this country from paper to coin involves a 
strufffifle for the needed coin with other countries, no one of 
which has any that is not urgently needed for its own payments 
and necessities. The United States will be at the disadvantage 
of struggling for the coin, of which other countries are in pos- 
session. It can be successful only by a reduction of prices in 
this country, not merely to the present level of coin-prices 
throughout the world, but to that lower level to which they 
must descend under such a new and great demand for coin as 
the resumption of specie payment in this country has occa- 
sioned. This crash in prices cannot be avoided by confining 
our demand for the metals to the products of our own mines. 
That product is a part of the current supply of the world, and. 
to subtract from that suj^ply is the same thing in its practical 
effect as subtracting from the stocks of the world, because the 
entire current supply is not more than sufficient to keep the 
existing stocks unimpaired. It cannot be avoided by borrow- 
ing coin abroad upon our bonds. ISTo such borrowing will be 
permitted to reach the gold of the great European banks, and 
nmst be confined to the small quantities floating in commercial 
hands. But the decisive consideration is, that even if gold 
should be obtained in that way, it could be kept here upon no 
other condition than a reduction of our prices to or below the 
coin prices of the world. 

My objections to a metallic basis for a circulating medium 
are : 

1st. All currencies based on metallic values must vary 
more or less as the supply of these metals increase or diminish. 

2nd. 'No two metals can bear the same ratio of value to 
each other for any considerable length of time, owing to the 
above reasons. 

3d. When one metal is made the standard or unit of 



184 I'll 1LU8U I'll V OF J'KICK. 

\alne, all other metals are forced to become isubsidiarv. 

4tli. When one metal is named as the sole measure of 
value, it immediately contracts the circulating medium of the 
country to the amount of that one metal, because all other cur- 
rency is measured by the existing standard. This increases the 
value of the one metal at the expense of all other kinds of cur- 
rency. It makes this one metal the arl>iter of all values, there- 
by giving it a power never intended in the economy of the 
exchanges of the world. 

5th. It makes the volume of circulating medium entirely 
dependent upon the success or faihire attending the disc^overy 
and operation of gold mines. With an increase of gold min- 
ing our circulation would expand ; with a decrease in that en- 
terprise, our circulation would contract. This would place all 
commercial values, both of products and labor, in a vacillating 
condition, rising or falling in proportion to the success or fail- 
ure of this one branch of business. 

<5th. The effect is bad enough when the condition of 
prices rests upon the success or failure of the two eiiter])rises — 
the mining of gold and silver — together, but when reduced to 
the single venture resulting from a gold standard, the effect is 
reduced to a degree of uncertainty that is generally disastrous 
to business. 

7th. Our business prosperity should Ije ])laced beyond 
any such contingency, because a failure in the business of min- 
ing the precious metals would react on all other branches of 
industry, and make their success depend entirely upon the 
good or bad luck of mining ventures. All our industries out- 
side of mining are V)ased upon close calculation, while the suc- 
cess of mining is sini])ly and only the result of chance. 

8th. The value of both gold and silver frecpiently change, 
and for this reason it is dilticult to determine whether other 
coinniodities have depreciated, or gold and silver appreciated 
in value. 



KIXD AND AMOUNT OF CUKKENCY. 185 

9tli. Gold and silver being simply commodities, it is nei- 
ther logical nor philosophic to say that one commodity shall 
measure the value of another. 

10th. The only currency that will perform the functions 
of an equitable exchange and measure of values is the incon- 
vertible paper dollar or unit, in itself incapable of increasing 
or diminishing intrinsically, and based on the wealth and abili- 
ty of the whole people, and the power of the general govern- 
ment to levy taxes, thereby making it for the interest of every 
citizen of the Eepublic to support and maintain our national 
integrity. 

11th. There is no such thing as a recognized money of 
the world. Outside of each nation all money is sold for its 
commodity value in pounds, ounces, etc. The oft-quoted idea 
has no foundation in fact, and only obtains through tlie igno- 
rance of the people on financial questions. 

12th, A nation with the diversified interests that ours 
])ossesses should have a currency of its own, a currency that if 
used and passed outside of our borders, beyond our national 
lines, would be without our consent ; and that for every dollar 
so used by foreign nations we should be that much the richer 
instead of becoming poorer, as now, by a constant drainage 
from our circulation of the precious metals. 

" Government paper money has always enriched a nation 
when properly issued, restricted, and secured. It has ever 
been a success. Specie, for a domestic currency, or as a basis 
for paper, has been a failure without a solitary exception. 

Napoleon, at St. Helena, claimed that England beat him 
with her spindles, but it was her paper money that kept the 
spindles in motion. Specie in its stead would have given him 
the victory. 

England's entire disregard of specie and copious issue of 
paper money after the suspension of specie payments in 1797 
till 1819 were the most prosperous days that England ever saw. 

This wise policy, to which she was driven by necessity, to- 
gether with the bills of credit issued by the United allied pow- 
ers, and which were not only as good, but superior to gold, 



KIND AND AMOUNT OF CUKRENCY. 186 

t'roiu ' Ivaiiiscliatka to the Rliiuc,' turned the tide of Avar against 
Napoleon, and won the decisive battle of Waterloo, saving 
England from becoming a province of France." 

In order to discuss the question of a supply of currency 
nnderstandingly, Ave should first examine the sources from 
which this supply is obtained, which are as follows : 

1st. The coinage of gold, which is free and unlimited. 

2nd. The coinage of silver, which is not free, and is lim- 
ited to two millions per month. 

3rd. The issuing of legal tenders by the Government, 
which is limited to about 317 milHons in amount. 

1th. The issuing of bank notes, which is unlimited in 
amount, but is not made compulsory. 

Through these four channels must come all the ciirulating 
medium of the nation. A glance at the above statements will 
sliow how completely the supply of currency is in the hands 
of moneyed men, and how strongly they are entrenched Ije- 
hind the law. 

The coinage of gold is absolutely without expense ; that 
is, any one who has gold can have it coined into money free of 
charge. This gives to that metal a premium over silver, and 
creates at the outset a discrimination against it. 

The coinage of silver is limited to a certain amount each 
month, and the Government reserves the right to purchase it, 
wherever it can be bought the cheapest. This makes competi- 
tion among the silver producers, which also tends to discredit 
that metal, for no matter how much may be mined, ready for 
coinage, this arl)itrary act of Congress limits the amount to two 
millions each month — all of which creates a feeling of distrust 
that is not favorable to silver, and is benelicial to gold. 

The issuing of more greenbacks is forbidden by law; 
hence, a further supply from that source is impossible. 

The only recourse seems to be with the national bank 
issue. This, at first glance, seems to be sufhcient and reasona- 



KIND AND AMOUNT OF CUKKENCY. 18 Y 

ble, but to examine it closely dissipates all sucli hopes. There 
is nothing, absolutely nothing, that compels a bank to take out 
any currency. Many banks do not. The only inducement for 
them in that direction is the question of profit. If it will pay 
to issue their bills, the banks issue them ; if it will not pay, 
they not only refuse to issue any, but retire what they have 
issued. So the amount of national bank currency does not de- 
pend on the wants or demands of the people, but the profit 
accruing to the banker; the people in the mean time pay 
to the banks this profit. In proof of this, we have 2,714 
banks, with a combined capital of $527,524,410 ; these banks 
are entitled to 90 per cent, of this amount in currency, which 
would be $4Y4,YY1,969. Instead of that amount, there is but 
$268,869,597 of national bank bills in circulation, a difference 
of $205,902,372. If it should appear to their advantage, the 
whole might be retired, and the circulating medium reduced to 
the extent of their whole issue. Such an act on their part 
would certainly bankrupt the nation. This is a power for evil 
that is delegated to no other corporations on the face of the 
earth. It absolutely dictates the values of everything in our 
country, fixes the price not only of labor, but all the jDroduc- 
tions and accumulations of labor. The fact that gold is not 
mined in sufficient quantities to satisfy the demand even for 
the manufacture of ornaments, and that the stock of coin and 
bullion has been encroached upon, is not very encouraging for 
a greater supply from that source. Men well posted in the 
supply of that metal declare that within the next decade the 
present stock of gold coin will be lessened by a large per cent, 
for purposes outside of money use. The world has been ex- 
plored to its uttermost parts for this metal, and the time seems 
near at hand when that industry will prove to be unremunera- 
tive at its present value. Even now its value is enhancing with 
every year. The supply for the purpose of money will grow 
less as the demand for it for other purposes increases, because 



188 PHILOSOPHY OF peice. 

money is gold in its cheapest form. People will pay more for 
it to use as ornaments than can be paid for it to use as money. 
It is its value as a commodity, and not as money, that is con- 
sidered. Gold is now rapidly appreciating in value, and the 
time will soon come wh^ for that reason alone it can not be 
utilized in that capacity. When that time comes, silver will go 
through witli the same course, being the next most precious 
metal, and without doubt the appreciation in value will force 
it from the metals out of which money is made. Enough good 
reasons have presented themselves to me to justify the idea 
that sooner or later the supj)ly of currency must come from 
the Government direct. That we must have free, unlimited 
coinage of gold and silver, and a certain amount of Govern- 
ment issues per capita of the people, w'ith an increase as the 
nation becomes more populous. 

The late decision of the Supreme Court has shown us that 
the Government can issue legal tender paper money at such 
times and in such quantities as Congress may determine. Why 
should the Government not put that ]3rerogative in force? 
Why should the people be compelled to pay for its being done 
])y heartless cori3orations ? In a debate in Congress upon this 
question a member said : 

" On the other hand, take away the profits on issuing cur- 
rency, and the banks will take away tlie currency itself. This 
is the condition of tilings now. It comes to this then : If you 
make it their interest to do so, the banks will put out an abund- 
ance of currency, even to the wildest inllation ; but if it is not 
made their interest to do it, they will not put out any."' 

Under the present banking laws, the banks of this country 
could inflate the currency to the extent of one or more billions 
of dollars in less than six months' time, and in the same time 
coiiti-act it by that amount. This is a power granted to a mon- 
opoly by our laws. This power is not only dangerous to the 
jiation, but disastrous to the common welfare of the people. 
What we need is a steady volume of curi'dicy, increasing with 



KIND AND AMOUNT OF CUEEENCY. 189 

onr population, and the growing demands of business. This 
cannot be brought about through delegated power. Such pow- 
er is almost always used in the furtherance of selfish purposes. 
Class legislation will prove ruinous to any nation. There 
should be, and might be, a happy medium between the debtor 
and creditor classes, the buyer and seller, the producer and con- 
sumer, in which the rights of each should be impartially con- 
sidered. 

After careful examination, I am led to believe that we 
should have at least fifty dollars per capita of currency in the 
United States. Our industries are so diversified and the extent 
and area of our land so great that we require more circulating 
medium to do the same amount of business than other nations 
whose populations are more condensed. This amount should 
be increased in volume in proportion as the country increases 
in population and business. With a currency of this volume, 
issued as before stated, universal prosperity would prevail 
throughout our land. 

We might with profit ascertain as nearly as possible what 
amount of work a dollar is required to do during one year of 
business. But few, I venture to say, can even approximate 
the truth in this respect. 

First, we will take up the actual debts of the country from 
our best authorities — known and estimated as follows : 

Our National Debt proper is $2,149,725,277.02 

Bonds to Railway Companies 64,623,512.00 

Interest on Bonds 18,627,743.43 

Unsettled liabilities (estimated) 250,000,000.00 

State and Municipal 1,000,000,000.00 

Loans, etc., by National Banks 944,233,304.22 

Loans, etc., by State Banks, etc 514,081,496.90 

Loans, etc., by same in twenty-eight States, etc. (estimated) 1,500,000,000.00 

Individuals to each other, etc., (estimated) 2,000,000,000.00 

Funded, etc., of Railroads 1,511,578,944.00 

Making the fearful total of $9,952,870,266.67 

This aggregate is almost incomprehensible. 

Add to this the returns from the clearing-houses for one 



190 PHiLosopuY OF rninE. 

year. A comparison of the business of all the clearing-houses 
of the United States is afforded by the following tal)le, com- 
piled from the figures furnished for the year ending Decem- 
ber 31, 1S84, and representing the clearings of each insti- 
tution : 

New York 130,985,871,170 

Boston 3,243,327,658 

Pliiladelphia 2,514,028,803 

Chicago 2,259,680,392 

St. Louis 785,202.177 

Baltimore 631,687,135 

San Francisco 556,857,691 

Pittsburn- 469,316,010 

Cincinnati 460,600,000 

New Orleans 454,500,000 

Providence 217,448,300 

Louisville 211,700,000 

Milwaukee 178,995,637 

Kansas City 177,175,467 

Ditroit 133,611,910 

Minneapolis 110,556,620 

(Cleveland 106,044,770 

Hartford 81,834,837 

Indianapolis 73,213,168 

Memphis 60,040,361 

New Haven 57,799,870 

Portland 45,421,102 

Peoria 44,058,884 

Worcester 39,610,041 

Sprintrlield 37,585,774 

Coluinbus 34,858,428 

SI. Joseph 34,657,818 

Norfolk 34,158,781 

Svracase 27,266,247 

Lowell 24,460,396 

Total ' $44,091,569,447 

To this enormous amount avc will iilso add : 

At,n-icultural Products $ 3,000,000,000 

Manufactured " 6,000,000,000 

Minin<'- 1,500,000,000 

Imports 650,000,000 

Taxation 300,000,000 

Frei'--hts 1 ,000,000.000 

I^abor 3,000.000,000 

Total !l;16,050,000,000 

I»ut this is only a commencement. If the clearing-house 
returns alone show 4-1 bdlions, how nnich M'ould all the Inisi- 
ness of the nation outside of what 1 have mentioned, aggre- 



KIND AND AMOUNT OF CUKEENCY. 191 

gate ? I have placed it at one hundred times as much. Let us 
recapitulate : 

1st, Debts • $ 9,952,000,000 

2nd, Clearing-house Returns 44,091,000,000 

3rd, Pi-oducts, etc 16,050,000,000 

4th, All other transactions 6,900,000,000,000 . 

Total $6,970,093,000,000 

The above sum is beyond human conception. With the 
present amount of currency among the people, say 500 million 
dollars, each dollar would have to change hands at least 46- 
times per day, or nearly five times during each business hour. 

Bankers will say, and truly, too, that 94 per cent, of all 
business is done with checks, drafts, etc. In view of this fact,, 
which is more important than all others, we, as a people, should 
have an increase of currency sufficient to reduce this per cent, 
of business, which has really been transacted on inflated credits, 
to a point as near to a cash basis as human wisdom can deter- 
mine. For the reason that the great volume of all the busi- 
ness of the country has long been done through a system of 
inflated credits, we notice with alarm that the wealth of the 
many is rapidly concentrating in the hands of the few. This 
kind of currency was invented for the rich — those who are 
able to have bank accounts ; and, bear in mind that 99 per cent 
of our people never had a bank account. None but the wealthy 
can use these substitutes for a circulating medium. Of all 
the inventions that man has devised to add riches to the rich at 
the expense of the poor ; of concentrating business in large 
monopolies and soulless corporations, thereby driving out all 
the smaller industries ; of making one portion of our people 
masters and the others slaves — I believe this system of check, 
draft and exchange paper inflation is the most ingenuous and 
destructive substitute for money ever known. 

It is not maintained that a compensation can be made for 
a shrinkage in the volume of money by an increase of such 
banking expedients as checks, bills of exchange, and clearing- 



192 rillLOSOPHY OF PRICE. 

houses. These expedients are now resorted to, and because 
jirofit is found in their use, always will be availed of to the ut- 
most possible extent. It is manifest, therefore, that, whatever 
the proportion or per centage they bear to the volume of mon- 
ey, it cannot be increased except through an increase in that 
volume. And it is as manifest that, when the volume of money 
is diminished, these expedients must diminish, and prices must 
fall in a corresponding ratio. Money is the prime and govern- 
ing force, whose functions cannot be superseded by any device 
whatever, and whose volume or existence does not depend on 
banking expedients, while these expedients grow out of money 
^nd could not exist without it. Tlie farthest extent to Vv^hich 
they can be used is already practically reached, and they can 
only increase, and must decrease, as the volume of money in- 
creases or diminishes. This reasoning partially applies as to 
the effect of credit on prices. 

It would seem to be reversing the natural order of things 
to maintain that prices are controlled by the volume of credit, 
instead of by the volume of money. "Without entering into 
an elaborate discussion of this intricate question, it may be said 
that prices were affixed to j^roperty at the time when the in- 
vention of money superseded barter. Fluctuations of prices 
frequently arise from special causes, but they are local and 
temporary in their character. 

Even were it possible to devise a money system so perfect 
that steadiness in the general level of prices would be absolute- 
ly assured, there would still occur occasional fluctuations in the 
prices of particular commodities, arising from a temporary 
glut or scarcity of such commodities in the general markets, 
caused by exceptionally favorable or unfavorable conditions, 
wliich might suddenly enlarge or diminish tlieir production, or 
vary the demand for them. Such fluctuations cannot be avoid- 
ed. They mark the ebb and flow of business, and no moi^e 
affect the general level of prices or prosperity than the ebb and 



KINB AND AMOUNT OF CUEEENCY. 



193 



flow of fhe tides affect tlie general level of the ocean. The 
producers of and dealers in each article should be better able 
than anybody else to foresee and guard against them, and have 
no. reason to complain of them. But they may well complain 
when the general level of prices is disturbed by monetary leg- 
islation which they could not foresee, are not responsible for,, 
and whose injurious effects they could not, by any degree of: 
prudence, avoid. 

As I have stated before, all the nations of the world, at 
the present time, seem to be striving for the possession of gold,, 
and are determined, if possible, to make it the sole standard of 
payment. The only means by which it can be obtained is by 
the sale and exchange of the products of labor. The nation 
that will part with its products the cheapest will obtain the 
gold and hold it until some other nation forces the price of 
products down to a still lower point. This is the cause of such 
a general depressipn in business all over the world. This strife 
has been so bitter and earnest that the price of all productions 
has shrunk below the range of any profit, and even below the 
cost of production. Consequently, we find bankruptcies and 
business failures throughout the civilized globe, ^o matter if 
all adverse balances are leveled up with exchangeable commod- 
ities, they must first be measured by the prevailing standard of 
payments of the country to whom the balance is paid. We 
now find England, France, Germany, Holland, the Scandina- 
vian States, and the United States all struggling for gold, 
because that metal, by secret governmental interference, has 
virtually become the standard of payments. We might, in 
certain cases, with some degree of safety, attempt to establish a 
gold standard by law, but with all these nations attempting to 
do the same thing, and competing with us for the gold neces- 
sary to keep the standard good, it would be the height of folly 
for this nation to adopt it. It would wreck the entire indus- 
tries of the countrv. 



194 PHILOSOPHY OF PRICE. 

I quote from a London paper: 

" Probably, if there were gold enough for all the world, it 
would be best that there should be only a single standard of 
value throughout the world, and that one — gold. But this is 
impossible. Some have doubted Mdiether there is gold enough 
even for the nations which now intend to use it; and there cer- 
tainly is not enough for all the world." — London Emnomist. 

One writer claims there is not gold and silver enough 
in the world to pay the interest on the world's indebted- 
ness. 

If our currency could be expanded sufficiently to enable 
at least a majority of business transactions to be conducted with 
money, the wealth of the nation would seek its level, and each 
individual would, in a much larger degree, reap the reward of 
his own energies. 

All of the truly great economists and scientists of the 
world freely admit that l)oth gold and silver have ever been, 
and from the nature of things, must ever be imperfect money, 
and an unjust standard or thermometer of prices. And they 
also admit, that a paper money issued solely by the Govern- 
ment, under a system that would duly and properly limit its 
amount — would be the most perfect economic and just money 
of which the present knowledge of man is able to conceive. 
Those who deny that such is the position held by the great 
economists of the world, and also the truth that has been estab- 
lished by some thirty centuries of mankind's experience, have 
failed in their study of the world's history, and any one who 
is inclined to doubt these statements can verify them by re- 
course to the proper course of reading. 

Those economic laws which may be perfectly sound and 
correct under certain customs and conditions, would, if carried 
into effect with us, be suicidal. The laws of many nations are 
made for dense populations, where there is and always has 
been, the rigorous 'rules of caste ; where men are born as law- 
makers, instead of being selected by the people. There is hardly 



KIND AND AMOUNT OF CUEEENGV. .195 

a condition in onr social and economic life Avliere the same 
rule of action would apply to both. 

Then why should we not be nationally independent in 
that greatest of all factors entering into our individual pros- 
perity and happiness — the currency of oxir country f 

Instead of being led. by the older nations of Europe, why 
do we not turn our attention to the vast field for operations at 
home, and lead the South American States and Mexico up to 
the plane of civilization, financially and socially, that we occu- 
py ? It would be satisfactory, remunerative and beneficent to 
the entire people. 




196 PHILOSOPHY OF PRICE, 



CHAPTER V. 

VALUE AND ITS RELATION TO MONET. 

" Money is, as it were, the substitute for legal demands 
(for payment) and hence it has the name vouioua (that M'liich 
is established by law), because it is not so by nature, but by 
law ; and because it is in our power to change it and render it 
useless." — Aristotle. 

In the minds of most people there is a sort of supersti- 
tious awe about money. Why it is money and how did it 
come to be such, are queries that have generally been vaguely 
answered. The word is invested with a kind of glaniour that 
keeps its real properties and functions from being investigated 
and made plain. No person ever handled a dollar, any more 
than he ever held in his hand a days' work. A dollar is an 
abstract idea, not the name of a thing, but the name of a qual- 
ity of a thing. Take for example a gold dollar. Its super- 
scription denominates it a dollar. Place it beneath the blows 
of a hammer, and deface the inscription. Now, what is it ; a 
dollar? No. It is a quantity of gold. The dollar is gone, 
without any loss of metal. No one saw it go from the metal. 
Neither can it be found. This dollar is an idea- — a mental con- 
ception — and has no relation to value in itself whatever. Nei- 
ther can it be value of itself in any sense. 

One class of M^iters state their case as follows : The dol- 
lar measures values the same as the yard-stick measures yards. 
The dollar is made of a certain number of grains of gold or 
silver. The yard-stick is composed of thirty -six inches linear 



TALUE AND ITS RELATION TO MONEY. 197 

liieasnrement. From this they argue : Is it right that the 
yard-stick should measure thirty-three inches to-day, and thirty- 
eight to-morrow ? "Where would the just standard of measure- 
ment be found ^ If it is not right to change the yard-stick it 
cannot he right for a dollar to be of one value at one time, and 
increase or diminish in value at another. This argument ap- 
pears plausible and quite unanswerable. Let us examine it. 

In the first place, it is not true that the dollar measures 
value as the yard-stick measures the yard. In the one case 
both are considered actual substances, while in the other both 
are mental conceptions or ideas. But supjDOse they were alike. 
In order to measure yards it is necessary to have yard-sticks ; 
also to measure value we must have the dollar or unit of meas- 
urement. It would foIloAv, therefore, that the more yards to 
measure the more yard-sticks would be necessary. Likewise, 
the more value to measure, the more dollars would be needed. 
We will not stop here. If the yard-stick should be made 
more than 36 inches in length, the seller would lose and the 
buyer gain, because the measure is increased and the number 
of measurements lessened. If the value of the dollar is in- 
creased, its capacity for measurement will be increased, and the 
number of measures lessened. Suppose a government should 
set its people to manufacturing cloth by offering special induce- 
ments, and at the same time make up a quantity of yard-sticks 
for their use. At first there might be yard-sticks enough and 
to spare, but as business increased, they would become more 
and more in demand, until the time came when there would 
not be enough to measure the cloth as fast as it came from the 
looms. Isow, suppose these yard-sticks were made from some 
rare material, difficult to find, whose very possession was the 
result of chance, and the making and furnishing was monopo- 
lized by the government. Suppose under these conditions the 
people clamored for more measures, saying their goods were 
unmeasured, and, consequently, for a lack of sufficient meas- 



198 PHILOSOPHY OF PRICE. 

ures remains unsold. AVliat would be the wise course for tlijit 
government to pnrsne ? Would it break up a large per cent, 
of the measures on hand and in constant use ? Would it say to 
its people — go out among the swamps and through the timber, 
and perhaps you may find some of the materfal out of which 
these measures are made. You can make no absolute calcula- 
tion as to its location, but must depend entirely upon chance to 
obtain it, and if luck should be in your favor, bring the mate- 
rial to me, and I will make you a certain number of measures 
each month. Would this be the wise course to pursue ? Cer- 
tainly not. The government should ask how many measures 
were needed, and then take the most convenient commodity, 
and make as many as its people needed, and also provide for 
future wants. How does this illustration apply to the dollar? 
Congress said, when the people were using three measures of 
value, "You have too many; we will destroy a portion of 
them," and it did. It claimed the measures were made of too 
many kinds of material — paper, silver and gold ; therefore, Ave 
will limit their composition to two of these — silver and gold. 
Again, it said, "We will limit the measures to one material, and 
that shall be gold alone." It was done. No matter how great 
the need of the people for these measures, no matter how 
much they clamored for them, the Government said, " Go to 
the hills and dig, and if you are successful, bring the results to 
me, and I will make the measures for you as I think you need." 
Would it not be better for the Government to say to the peo- 
ple, "You shall have all the measures that your business de- 
mands, and for fear some evil disposed persons might in some 
manner get possession of too large a portion of them, and levy 
a contribution for their use, I will furnish an abundant supply." 
Notwithstanding the fact that time and human progress 
has changed nearly everything else in our economic existence, 
we find ourselves paying out to-day, silver, the current money 
of the merchants, the same as Abraham did more than 4,000 



VALUE AND ITS KELATION TO MONEY. 



199 



years ago, when he bought the cave of Machpelah. We are 
digging for the same material, gold, for which Solomon so 
anxiously struggled. 

The most ancient idea connected with the temporal rela- 
tions of man is that of gold and silver as money. No other 
idea, among the millions that have been advanced, relating to 
the social and business conditions of the human family, has 
withstood the changes of progressive civilization and main- 
tained its original character as has this idea of money. 

In those days of nomadic governments, this idea became 
general for obvious reasons. It continued down through the 
history of weak and unstable nations preceding the fifteenth 
century, and began to be relaxed with the invention of bills of 
exchange, or paper money, in the sixteenth century. As bills 
of exchange, checks, and paper money have increased in use, 
mankind have, without understanding its import, in direct ratio 
to that increase, yielded to the solid fact that there can be no 
intrinsic value in money. 

During the reign of Augustus Caesar, the gold and silver 
money of the whole world amounted to less than the present 
amount of gold and silver in the United States. During the 
Dark Ages, from the fourth to the fifteenth centuries, the 
mines having failed, this amount was diminished to about 200 
minions. The gold and silver mined and used, following the 
discovery of America, combined with the use of bank paper, 
rekindled the ghmmering fires of civilization, and made possi- 
ble the grandeur of the nineteenth century. We are met here 
with representatives or substitutes for money. 

If money must have value intrinsically — a certain amount 
of either gold or silver — then there is no method known by 
which it can be increased in amount, only by an increase in the 
quantity of the metals. If they are represented or substituted, 
they must remain at their maximum to redeem their represent- 
atives or substitutes. They cannot perform both functions at 



200 PHILOSOPHY OF price. 

once. When tliere are more substitutes than principals, tlie 
overj)lus ceases to be substitutes, and necessarily becomes a 
fraud. It is impossible to represent value, when there is no 
value to represent. A thousand paper dollars cannot be repre- 
sented by five hundred coin dollars, both being possessed of 
equal debt-paying power. Yet, if this doctrine of intrinsic 
value in money should be strictly applied, tliere is not enough 
of this kind of value to redeem one per cent, of the money obli- 
gations of the world. There is not enough to pay one-half the 
yearly interest on national and corporate indebtedness. 

This idea has been so far exploded that ninety per cent, of 
all the business of the world is done with money having no in- 
trinsic value. Some will say these representatives of money 
are good. That may be trne, but their worth comes only 
through a strained confidence in business men. The persons 
issuing them may be rich in property, bnt property is not 
money. The fact is, this kind of money is good as currency 
until the principal is called for, then the fact of its being a 
representative of an obsolete idea becomes painfully ap- 
parent. 

The material upon which the imprint that makes money is 
stamped may have a commercial value, but the money — the 
insignia of a nation's sovereign authority — never. 

The precious metals change less in value than other com- 
modities, silver much less than gold ; but both being products 
of labor, and controlled by the same factors that control all 
other labor-products, must fluctuate in value as the circum- 
stances under which they exist change. These two metals, 
aside from their money functions, are governed by the same 
rules which govern all other metals, and are exempt from none. 
They are more valuable because of their scarcity, and more 
l")recious because of the difficulty connected witli their acquisi- 
tion. If gold was as plenty as iron, it would not be as valua- 
ble, because it could not be as useful to man as iron. The ex- 



VALUE AND ITS EELATION TO MONEY. 



201 



periment lias been tried for a long series of years to maintain 
a certain ratio between silver and gold for the purpose of 
securing a uniform standard of payment. While these two met- 
als are less apt to fluctuate than others, it is certain that they 
do vary, and have maintained their ratios but for short periods 
at a time. In this relation they act as a check upon each other 
and should never be separated in their legal functions. 

That gold and silver fluctuate in value, I quote : 

" By limiting the quantity of money, it can be raised to 
any conceivable value. It is on this principle that paper mon- 
ey circulates." — David Eicardo. 

" Thus it appears that, whatever may^ be the material of 
the money of a country, whether it consists of gold, silver, 
copper, iron, salt, cowries, or paper, and however destitute it 
may be of any intrinsic value, it is yet possible, by sufficiently 
limking its quantity, to raise its value in exchange to any con- 
ceivable extent."— Prof. McCulloch. 

" It is well known that the discovery of America (with its 
rich deposits of gold and silver) was followed by*a great and 
permanent fall in the price— purchasing power — of the precious 
metals, which reduced it to one-fourth of their previous rela- 
tive value to all other commodities." — Albert Gallatin. 

"From 1789 to 1809 gold fell 45 per cent. From 1809 to 
1849 it rose in value 145 per cent."— William Stanley Jevons. 

Humboldt says that the gold and silver money in circula- 
tion in the eighteenth century is — at the time he wrote — tliirty 
times greater than in the fifteenth century, and that its value 
or purchasing power was only one-twelfth of what it then was — 
that is, 8 1-2 cents would then buy as much as 100 would at 
the time he wrote. 

Prof. Bonamy Price says that -the purchasing power of 
the so-called precious metals has fallen fourteen times since the 
reign of the Henrys— that is, Y 1-7 cents would then buy as 
much as 100 will now. 

Laveleye illustrates this very handsomely in this paragraph: 

"This immense stock of the precious metals lessens the 
variations in the value which might result from the variations 
in the annual supply, just as the level of a great lake is little 



202 PHILOSOPHY OF PRICE, 

affected by any changes in the discharge of the i-ivers wliich 
How into it." 

Adam Smith, Wealtli of Nations, p. 38, says: 

"(Tohl and silver, liowever, like every other commodity, 
are sometimes cheaper and sometimes dearer ; sometimes of 
easier and sometimes of more dithciilt purchase. The discov- 
ery of the abundant mines of America in the IGtli century, 
reduced the value of gold and silver in Europe to about one- 
third of what it had been before, and this revolution in their 
value, though perhaps the greatest, is by no means the only 
one of wliich history gives some account. But, as a measure 
of quantity, such as a foot, fathom, or handful, wliich is con- 
tinually varying in its own quantity, can never be an accurate 
measure of the quantity of other things, so a commodity which 
is itself continually varying in its own value can never be an 
accurate measure of the value of other commodities.'" 

* "Silver, in bullion or money, changes its value from any 
change in its quantity, or in the demand for it. In either of 
these cases goods are said to be dearer or cheaper ; but 'tis sil- 
ver or money is dearer or cheaper, being more or less valuable, 
and equal to a greater or lesser ciuantity of goods." 

f "The value of money is inversely as general prices: fall- 
ing as they rise, and rising as they fall. * * '"^ 
Let it, therefore, be remembered — and occasions will often 
arise calling it to mind — that a general rise or a general fall of 
values is a contradiction, and that a general rise or general fall 
of prices is tantamount to a rise or fall in the value of money." 

\ "But there is abundance of evidence to prove that the 
value of gold has undergone extensive changes. Between 1789 
and 1801), it fell in the ratio of 100 to 51-, or by 46 per cent., 
as I have shown in a paper on the variation of prices since 
1782, read to the London Statistical Society in June, 1865. 
From 1809 to 1849 it rose again in the extraordinary ratio of 
100 to 245, and by 145 per cent., rendering government annui- 
ties and all fixed payments, extending over this period, almost 
two-and-a-half times as valuable as they were in 1809. Since 
1849, the value of gold has again fallen to the extent of at 
least 20 per cent., and a careful study of the fluctuations of 
prices, as shown either in the American Reviews of Trade of 
the Economist newspaper, or in the paper referred to above, 

*.Iohn Law: Money and Trade Considered, chap. v. 

+,J. S. Mill: Principles of Politieal Eeononiy, page 3G7-297 

;W. Stanley .Jevon.s' MeeliaiiiMU of Exchange, p. 325. 



VALUE AND ITS RELATION TO MONEY. 203 

shows that fluctuations of from 10 to 25 per cent, occur in 
every credit cjcle." 

* "The precious metals are often spoken of as ' the standard 
of vahie,' which is true only in a restricted sense. A standard 
must remain the same, however other things change ; and this 
is certainly not true of gold and silver. Their purchasing 
power has been continually varying, generally declining, as the 
natural deposits, of their ores have been laid bare, and the resist- 
ance of nature to those who searched for them has diminished." 

KEPOET FEOM THE SELECT COMMITTEE ON THE HIGH PEICE OF 

GOLD BULLION. 

{Ordered by the House of Commons, to be printed, June 8, 1810.) 

" The Select Committee appointed to enquire into the cause 
of the High Price of Gold Bullion, and to take into con- 
sideration the state of the Circulating Medium, and of tlie 
Exchanges between Great Britain and Foreign Parts ; — and 
to report the same, with their Observations thereupon, 
from time to time, to the House ; — Have, pursuant to the 
Orders of the House, examined the matters to them re- 
ferred ; and have agreed to the following report : 

Your Committee proceeded, in the first instance, to ascer- 
tain what the price of gold bullion had been, as well as tlie 
rates of the foreign exchanges, for some time past ; particular- 
ly during the past year. 

Your Committee have found that the price of gold bull- 
ion, which, by the regulations of His Majesty's Mint, is ?jI. 
Vis. 10 l-2(^. per ounce of standard fineness, was, during the 
3^ears 1806, 1807 and 1808, as high as 4Z, in the market. 
Towards the end of 1808 it began to advance very rapidly, and 
continued very high during the whole year 1809 ; the market 
price of standard gold in bars fluctuating from ^l. 9^. to VI. 
12^. per oz. The market price at VI. V)s. is about 15 1-2 per 
cent, above the Mint price. 

Your Committee have found, that during the first three 
months of the present year, the price of standard gold in bars 
remained nearly at the same price as during last year ; viz., 
from VI. 10s. to VI. 12s. per oz. In the course of the months 
of March and April, the price of standard gold is quoted but 
VI. once in Wettenhall's tables, viz., on the 6th of April last, at 
6s. which is rather more than 10 percent, above the Mint price. 

It will be found by the evidence, that the high price of 
gold is ascribed, by most of the witnesses, entirely to an alleged 
*R. E. Thompson: Social Science and Nat. Economy, p. 160. 



204 PHILOSOPHY OF PRICE. 

scarcity of that article, arising out of an unusual demand for 
it npon the continent of ICurope. This unusual demand for 
gold upon the continent is described by some of them as being 
chiefly for the use of the French armies, though increased also 
l)y that state of alarm, and failure of confidence, which leads 
to the practice of hoarding.'' 
Mr. Patterson : 

"The effect of the Eastern Trade upon the value of the 
precious metals has hitherto attracted but little attention ; yet, 
without a perception and appreciation of the facts which we 
have now set forth, the events connected with the value of 
money during the last quarter of a century would be wholly 
inexplicable. It has been the drain of the precious metals to 
the East, to meet the requirements of Indian trade and invest- 
ments, which alone has falsified the confident predictions of all 
the highest authorities as to a stupendous fall in the value 
of money, and especially of gold. But one remarkable cir- 
cumstance still remains to be explained — namely, the recent 
fall in the value of silver ; which event, likewise, is the very 
opposite of what was expected. The currency of the East is 
silver, and consequently it is in silver that the greater part of 
the enormous payments of specie to India have been made. 
How, then, does it happen that it is silver, and not gold, that 
has fallen in value ? — fallen, or apparently fallen, in tlie West, 
while its value is still maintained in the East? 

.When the new gold-mines were discovered it was univer- 
sally predicted that, while gold would lose a great part of its 
old value, the value of silver would be fully maintained. And 
had the extraordinary expansion of the Eastern trade been 
foreseen, it must have been predicted that silver would not 
only maintain its old value, but rise almost to a famine-price. 
As is well known, silver did for several years rise in value 
compared to gold ; although we think there is ground for be- 
lieving that the rise was not absolute — i. <?., as measured in 
general connnodities, but was only equal to, and produced by, 
the contemporaneous decline in the value of gold. Be that as 
it may, for uj) wards of twenty years subsequent to 1850, the 
price of silver, as measured in gold, stood considerably a])ove its 
old value — rising from 59 2>Ad per ounce to 62«'Z, and then declin- 
ing to its old value — or a fraction below it — viz., 59 1-4^/ in 1873. 
Considering the facts of the case, this rise in the value of silver 
was a very small one. As we have shown, between 1858 and 
1865, the amount of silver exjDorted to India actually absorbed 



VALUE AND ITS RELATION TO MONEY. 205 

the entire contemporaneous yield of the silver mines, and 
£40,000,000 more. In other words, this drain of silver to the 
East was equivalent in its effects upon Europe and America to 
an entire stoppage of the silver mines, together with an actual 
drain and deduction of £40,000,000 from the existing curren- 
cy of the Western world. But in 1873 the tables turned, and 
silver began to decline rapidly in value compared to gold — 
reaching its lowest point in 1876, the year of the Silver Panic, 
when the price fell to i:1d. per ounce. To some extent, doubt- 
less, this fall in the value of silver may be ascribed to the 
recent comparative scarcity of gold, occasioned by the decreased 
production of the gold mines. It has also been owing to the 
large increase in the supply of silver from the new Kevada 
mines; and also to the fact that, owing to the increase of 
wealth, silver has recently been gradually becoming less suita- 
ble as currency in the leading countries of the Western world, 
and has, to a great extent, been legislatively demonetized in 
some of those countries, — viz., in Germany and Scandinavia, 
and partially in the United States and France." 

From the foregoing excellent authority I have clearly 
proven that both gold and silver fluctuate in value. How is it 
possible, then, to measure correctly when the measure itself is 
defective ? 

That gold has varied in its value, and that gold and silver 
have varied in their ratio to each other, I give the following 
carefully prepared table : 

Gold, coined and uncoined, has varied greatly in value 
within historic times. A pound of gold in London brought : 

A. D. 1344 £15 00s. Od. or | 75.00 

" 1345 13 3 4 or 65.83 

" 1347 14 00 or 70.00 

" 1412 ■. 16 13 4 or 83.32 

" 1464 20 16 8 or 104.16 

" 1526 27 00 or 135.00 

" 1549 34 00 or 170.00 

" 1605 40 10 or 202.50 

" 1626 44 10 or 222.50 

" 1718 46 14 6 or 233.62 

That is the value of a pound of gold, Troy weight, to-day. 
The relative values of gold and silver have changed at 
different times, and we have collated a few of the more note- 
worthy variations in the subjoined table : 



206 PHILOSOPHY OF PRICE. 

Herodotus recorded that 1 part goid ecjiialed 13 of silver 

Alexander tlie Great's time 1 "' " " 10 " 

Rome after Punic War 1 " " " 17.57 

Home under Julius Ca?sar 1 " " " 18.93 " 

Century after Columbus 1 '' " '' 10 to 13 

Follow'inif two centuries 1 "' " " 14 to 16 " 

England under William, lfi89 1 " "' " lo 

Berlin in 1838 1 " " " la.GO 

United States laws, 1792 andis;^..! " " " 15 & 15.87 ''^ 

France under and since empire 1 " " " 15.50 

I have stated that vakie never did, and never can, measure 
value, any more than corn can measure corn ; tlie idea of quan- 
tity alone determines that. Not only the quantity to be meas- 
ured, but the size of the measure as well. It is no more cor- 
rect to say that value shall be measured by a gold dollar than 
that a yard shall be measured by a gold yard-stick. "We are 
told that a yard used to be the length of the King's arm. It 
increased and decreased in length with the stature of the king. 
So with the measure of gold or silver; it increases and de- 
creases with the amount of it in sight or in use. 

Quantity is the fundamental element that establishes value. 
In the attempt to evade this general law all the swindles inci- 
dent to the use of money originate. As I have stated in a 
previous chapter, I repeat in substance again, — demonetize 
both gold and silver, and at the same time permit the unlimited 
coinage of both. Then authorize the Government to issue 
j)aper money, redeemed by taxes, to the amount of not less 
than fifty dollars per capita. This, in my judgment, is a com- 
plete solution of the whole currency question. With this cur- 
rency there could be no variation. Gold and silver would still 
be worth their commodity value the same as now, with one ex- 
ception. This commodity value would be a thing to sell in- 
stead of an instrument to measure values, as is now the case. 
Xeither ffold nor silver is a fair measure of value. The com- 
mercial value of one commodity can never be determined by 
tlie commercial value of another, with any degree of equity, 
for any length of time, because the relations existing at one 
time are rarely the same at another. The commercial value of 



VALUE AND ITS RELATION TO MONEY. 207 

the metal in the gold or silver dollar makes the size of the 
measure, as judged by them, with an increase or decrease cor- 
respo;.iding to its value commercially. There is an increase or 
decrease in the commercial value of all commodities measured 
by them. If every factor in all business transactions could 
remain stationary this might do, but we know that at any mo- 
ment changes of conditions may occur that will affect not only 
the material but moral world. We can no more take gold and 
silver at a certain ratio of value as compared with each other, 
and measure labor and its products, than we can take a bushel 
of wheat and a bushel of corn for the same purjDOse. The 
ratio of value between the two measures of value cannot be 
maintained with any degree of accuracy, much less the ratio of 
all other products. If corn should be a failure one year, there 
would have to be more wheat in the bushel. On the other 
hand, if wheat should be a failure, more corn would be put in 
the bushel, not to measure values by alone, but to keep the 
ratio exact between the two measures. This process seems 
burdensome and unnecessary. Some nations have one, and 
some another ratio by weight between the two metals. During 
the war the bullion in a silver dollar was worth three and a 
half per cent, more than the bullion in a gold dollar. It is 
claimed now that gold bullion, with the same ratio of weight, 
is worth the most. Who can tell ? When the commercial value 
of the two measures of value is changeable and uncertain, how 
can their measurement be accurate ? 

For these and many other reasons that might be advanced 
I believe the time is near at hand when our circulating medium 
will be based on taxation. This nation could float at par fully 
t\vo billions of paper money based on our present taxation. 
This would not only be safe but always uniform. 

The difference between a treasury and a bank is, one pays 
out money, while the other loans it. Let the government say to 
the people : Wfe will pay you this money for services and material 



iiOS PHILOSOPHY OF PRICE. 

for public use, and will receive it from you for all taxes — State 
as well as national. AVho will doubt the success of the enter- 
prise? The taxation for ordinary government expenses and 
internal improvements actually necessary for this great nation 
would amount to from five to eight hundred millions per 
annum. What a permanent and safe basis this would make for 
a circulating medium. In connection with an unlimited coin- 
age of gold and silver this would give us purely an American 
currency for an American people. 

The fatal mistake of our government was in paying one 
kind of money to the bondholder and another to the soldier. 
The war would have ended two years before it did, and the 
debt resulting would have been merely nothing if a full gov- 
ernment legal-tender had been issued and kept in circulation. 
Besides this, there is no such thing as money value either in 
justice or in fact. There would be one value for gold, another 
for silver, another for copper. Money measures value, and 
therefore cannot be value itself. We want a measure that can- 
not fluctuate. Such a measure must be an abstract thing, of no 
intrinsic value, but having legal functions. That is exactly 
the status of the dollar. But men have coupled the abstract 
idea with the substance and given it a commercial value. If we 
should issue notes payable in wheat, the less wheat the greater 
the value of the notes ; the more wheat the less would oe the 
value of the notes. Tho same rule applies to gold and silver, 
because wheat and coin (bullion) are both commodities and sub- 
ject to similar variations in value. For these reasons I submit 
that notes or currency bottomed on taxation would be stable 
and without any fluctuation. 

"Metallic money, whilst acting as coin, is identical with 
paper money, in respect of being destitute of intrinsic value ; 
with this single difference, that when it is desired to reproduce 
that intrinsic value, the sovereign can be instantly turned into 
bullion. * * * Still, whilst circulating, both make no 
use of intrinsic value ; and this is the great point to grasp 
firmly." — North British Keview. Nov.. 1861 



PEOTECTION TO HOME INDUSTRY, ETC. 209 



CHAPTEE YI. 

PEOTECTION TO HOME INDUSTEY AND CONTEACTION OF 
CUKEENCY. 

I am a firm believer in a protective tariff, 'Not an exces- 
sive tariff, but one sufficient to afford ample protection to our 
native industries. 

Our free, intelligent, civilized labor should not be com- 
pelled to compete with foreign servile, ignorant, half -civilized 
labor upon our own soil. 

"We should not, nnder any circumstances, permit foreign 
pauper labor — made so by despotic laws — to rob our cwn toil- 
ing millions of their richest and most righteous inheritance, a 
home market for the fruits of their labor. 

The products of every nation carry with them in their 
cost of production, the morals, civilization and intelligence of 
the country in which they, are produced. Therefore, we should 
allow no foreign production to compete with its kind in our 
own markets, unless it represents in its cost value of produc- 
tion the same elements of civilization that enter into our own. 
If, by reason of an absence of these factors in its cost of pro- 
duction, its value is lessened below that with which it seeks to 
compete, I believe a tax should be placed upon it to make up 
the discrepancy. This should be done that our own laborers 
shall not be compelled to dispense with their civilizing and 
moral benefits which have placed them on a higher and hap- 
pier plane of social existence than their less fortunate compet- 



210 PHILOSOPHY OF PRICE. 

itors. In doing this we .simi>]y obey Nature's first great law — 
self-preservation. 

At the present time, with our alleged surplus, there is 
much discussion about the markets of the world. Many of 
our people are anxious to con.'pete for their surmised benefits. 
There is nothing to prevent such action, even now'. There is 
no law on our statute books against such competition. The 
farmer or manufacturer, if dissatisfied with the home market,, 
can go to that of any other country, as there is no export duty. 
But when once out from under the fiag of this nation, the 
rules and regulations of commerce of the nation to which tliey 
would go must be obeyed. 

The reason our exports are not larger is because some- 
other people sell similar products cheaper. The only question' 
asked by a purchaser is, "Where can I buy the product I w^ant 
cheapest?" When that condition is complied with, nothing is 
easier than large sales. Wheat will serve as an example to 
illustrate this fact. Russia and India compete with us in the 
sale of that cereal. Our wheat goes into the market as the 
product of well-paid, well-fed, intelligent, free labor. It rep- 
resents in its first cost its share of the taxation that built our' 
highways, bridges, and improved our water wa3's ; that pays for 
our free schools, our institutions of charity and reform, our 
churches, and the expense of our moral training ; the enforce- 
ment of laws for protection to life and property, and the gen- 
eral welfare of the people. These, in part, are the objects for 
which, not only this product, but all others in this nation, are 
compelled to contribute. The product of our competitors pre- 
sents a far different example. It represents ignorance, supersti- 
tion, and a want of moral culture. It brings with it no smile 
of civilization, none of the higher conditions of freedom, but 
instead, it comes weighted with the blight of oppression, and 
brings with it the foul breath of beastly instincts. Neverthe- 
less, these products compete with ours. If we must meet this 



PROTECTION TO HOME INDUSTRY, ETC. 211. 

competition, if we must give up our home markets and gO' 
abroad, our duty is plain — we must look to the first cost of our 
productions, which alone will enable us to sell cheap. Every 
factor that enters into this first cost must be eliminated that is 
possible. Every endeavor must be made to render our produc- 
tions cheaper than those of other countries ; for by this means 
only can success be expected. In following out this line we 
must ignore public improvements, and suffer those already 
made to go uncared for ; do away with our public school sys- 
tem ; destroy our other institutions of learning and charity ; 
open the doors of our penitentiaries, and close the doors of our 
churches. In a word, wipe out the means by which the com- 
mon desire of our people to excel in all that ennobles our race 
can be satisfied, and we will then be on the high road toward 
successful industrial competition. 

One of two conditions must be brought about. The civ- 
ilization of other nations must be raised to the same plane as 
ours, or our civilization must be lowered to the level of theirs, 
before anything like just or fair competition can be entered into. 

In order to make this argument complete, there are two 
other important factors to take into consideration, — first, for- 
eign immigration, and second, domestic currency, both of 
which are of vital consequence to this question. 

It is not right to keep the manufactured end of a piece of 
cloth protected from foreign competition, and at the same time 
permit the labor end of this piece of cloth to stand open for the 
labor competition of the world. If the manufacturer is per- 
mitted to go abroad for his workmen, let the laborer go also for 
his clothes. If the laborer is debarred from importing liis coat, let 
the manufacturer be denied the right to import his help. Free 
trade in men and protection of manufactured articles builds 
up monopolies, and makes the rich richer, and the poor poorer. 
Either protect both, or make both free ; that is the doctrine of 
common sense, and must sooner or later prevail. 



'2i2 PHILOSOPHY OF PRICE. 

For twentj-five years tliis Government lias been guided 
by a protective tariff, based upon conjectured benefits, and the 
acknowledged purpose of bettering the condition of the labo'r 
ing man — to make him more intelligent, more happy, and 
better fitted for a higher plane of civilization. During twenty 
years of that time the following law has been upon our statute 
books. Read it carefully, and, if possible, imagine a more 
gigantic fraud, a more colossal example of hypocrisy possible. 
The bulk of those who honestly believe in the doctrine of pro- 
tection, w^ould hardly believe such an imposition possible : 

^^Be it enacted hy the Senate and House uf Representatives of 
the United States of America in Congress assemhled: 

Sec. 1. That the President of the United States is hereby 
authorized, by and with the advice and consent of the Sen- 
ate, to appoint a commissioner of immigration, who shall be 
. subject to the direction of the Department of State, shall hold 
his office for four years, and shall receive a salary at the rate of 
two thousand live hundred dollars a year. The said commis- 
sioner may employ not more than three clerks, of such grade 
as the Secretary of State shall designate, to be appointed by 
him, with the approval of the Secretary of State, and to hold 
their offices at his pleasure. 

Sec, 2. And he it further enacted^ That all contracts that 
: shall be made by emigrants to the United States in foreign 
countries, in conformity to regulations that may l)e established 
by the said commissioner, whereby emigrants shall pledge the 
wages of their lahor for a term not exceeding tivelve months, 
to repay the expenses of their emigration, shall be held to be . 
valid in law, and may l)e enforced in the courts of the United 
States, or of the several States and Territories ; and such ad- 
vances, if so stipulated in the contract, and tlie contract l)e 
recorded in the recorder's office in the county where the emi- 
grant shall settle, shall operate as a lien upon any land there- 
after ac<piired hy the emigrant^ whether under the homestead 
law wJien the title is ronsnmmated, or on p>roperty otherwise 
acquired until liquidated hy the emigr((nt^ but nothing here- 
in contained shall l)e deemed to authorize any contract contra- 
vening the Constitution of the United States, or creating in 
any way the relation of slavery or servitude. 

Sec. 3. And he it further enacted^ That no emigrant to 
the United States who shall arrive after the jjassage of this act 



PROTECTION TO HOME INDUSTRY, ETC. 213'- 

shall be compulsively enrolled for military service during the 
existing insurrection, unless such emigrant shall voluntarily 
renounce under oath his allegiance to the country of his birth, 
and declare his intention to become a citizen of the United 
States." 

Such an act as this does not tend to strengthen a belief in 
the integrity of those benefited through a protective tariff„ 

Every speaker or writer upon this subject undertakes to 
show that this restriction on commerce is for the entire benefit, 
in the ultimate, of the laborer. While at the same time an- 
other law made by the same party, and under the same admin- 
istration, pours into this nation, to compete with its laborers,, 
this stream of filthy jDauper laborers from foreign countries 
under contract. To make absurdity absurd, in the general 
ap|)ropriation bill passed a few months after the one quoted 
above, was the following : 

"For expenses under the act of Congress to carry into effect 
the treaty between the United States and Her Britannic Majes- 
ty for the suppression of the African slave-trade, seventeen 
thousand dollars. 

For expenses under the act to encourage immigration, 
twenty-five thousand dollars." 

Seventeen thousand dollars to put down black slavery, and 
twenty-five thousand dollars to inaugurate a system of white 
slavery, in order to make protection protect. This first propo- 
sition must be seriously considered. 

Second. Protection of home industry and contraction of 
currency cannot be successful in the same country. No gov- 
ernment can enforce both of these propositions and be pros- 
perous for any great length of time. They are diametrically 
opposed to each other. To protect home industry is to increase 
our home business. The more successful protection is, the 
more these business transactions will be multiplied. The found- 
ations on which this great doctrine stands are home markets 
and home consumption. The purpose of protecting our 
domestic industries is to increase the volume of our domestic. 



214 PHILOSOPHY OF PRICE. 

or national business. The more it is practiced, the larger pro- 
portions will the transactions assume. On the other hand, con- 
traction means a limitation of the currency to the smallest 
possible amount, thereby taking away the very means by which 
business transactions are made practicable. All values are 
measured with money, and all business transactions are leveled 
up with money. Consequently, the amount of business must 
conform to the volume of currency in circulation. " More 
business transactions with less currency " is pure fiction. The 
engineer might, with equal reason, attempt to run more ma- 
chinery with less i)ower. The ideas of protection and contrac- 
tion are contradictory, and can never be successfully enforced 
together. 

I have clearly demonstrated in the previous chapters of 
this book that the ability to jDurchase establishes the price of 
our products. Another proposition I desire to state is, that 
when we do not, for any reason, no matter what it may be, see 
fit to avail ourselves of the price or commercial value placed 
u])on our products T)y the ability to purchase which our own 
people can offer, and go to some other nation to sell, we are 
simply exchanging the ability which that nation has to pur- 
chase, for that of our own. Many times, in that case, the price 
or ability to purchase of the foreign nation not only establishes 
the commei'cial value of the exports, but of all that is con- 
siuned at home. If we exported no wheat or flour, our own 
markets would govern their price. But now the London 
market rules both ; that is, the ability of England to purchase 
breadstuffs determines how much or how little the American 
consumer shall eat. We are met here with the (piestion of 
overi)roductit)n. In reply I emphatically say there can be no 
overproduction, but instead it is always an underconsumption 
that gluts our markets. That underconsumption is an 
unsupplied demand for products, visible all over the land. 
The xinrequeited demand is the result of a lack of ability 



PEOTECTION TO HOME INDUSTRY, ETC. 215'' 

to purchase. And when onr products are sent abroad to l)e 
sold, in ahnost every case it is owing, not to a want of demand 
at home but to a lack of ability to purchase ; and it shows con- 
clusively that some other nation -is better prepared in that 
respect than ours. 

If every person living within the confines of our national 
bordei'S was comfortably fed, clothed and housed, there could 
be no surplus. With our present diversified industries it would 
be impossible. 

We exported in 1883, the last authentic report I have : 

Wheat, bush '. 106,385,000 

Flour, bbls 9,205,000 

All reduced to flour would be about 5,912,280,000 pounds. 
Dividing this among 60 millions of people gives 98 1-2 pounds 
to each, or 4 1-3 ounces each per day. That is, if as a nation 
we had consumed 4 1-3 ounces of flour per day, for each per- 
son, more than was consumed, no wheat or flour would have 
been exported. 

Again, the same year there was exported : 

Sheep 337,000 

Cattle 104,000 

Hogs 16.000 

Reduced to pounds would amount to about 71,850,000. 

Hams and Bacon 340,258,000 

Beef, fresh 81,000,000 

Beef, salted 41,680,000 

Pork 62,116,000 

Pounds total 596,904,000 

Divide this among 60,000,000 of people and we have 
less than ten pounds for each person, or about one-half ounce of 
meat per day for each to c'onsume, more than was consumed, in 
order that there would be no exportation of meats. Our whole 
exports amounted to only $14.00 per capita, or less than four 
cents each per day. Is there anyone who doubts the present 
demand in this nation for 4 1-3 ounces of flour and 1-2 ounce 
of meat per day for each person ? If there is, let him make a 
tour of the haunts of wretchedness and starvation that exist all 



"216 PHILOSOPHY OF PRICE. 

about us in every direction. Less than four cents per day 
expended by each would keep all our products at home, thereby 
giving our j^eople much more labor and consequently a pro- 
portionate quantity of the comforts of life. 

AVhy does this amount go abroad ? Certainly, as I have 
shown, not for want of home demand, but for want of means 
to purchase. This want of ability to purchase their home 
products has been brought on the people by the contraction of 
our circulating medium. 

For these reasons I repeat : Protection and Contraction can 
not prove successful. One must give way to the other. 




CONCLUSIONS. 217 



CHAPTEE YII. 



CONCLUSIONS. 



I have untertaken to show tha,t price is established by an 
ability to purchase; that the ability to purchase depends; 
entirely upon the volume of currency among the people ; and 
that upon the price of labor and its products depends the pros- 
perity of the civilized world. 

I have shown clearly in the case of our own nation, and 
from the ablest writers and scholars of other countries, that, 
with an increase of currency prices advance and prosperity fol- 
lows, while with a decrease of currency prices fall and adversity 
soon comes. ISTothing is plainer than the truth of these propo- 
sitions. In view of the facts, what, as intelligent men having 
the welfare of the whole nation at heart, ought we to do in the 
matter ? We know the cause of our ills, and where the remedy 
lies. Shall we sit down and not apply the remedy — not make 
an effort to rectify these growing evils ? If we remain inactive 
there should be no further complaint if trouble overtakes us in. 
the near future. 

The war between labor and capital must be settled, that is,, 
each must have its rights as near as possible, and then continue- 
in a state of armed neutrality to protect each other from 
encroachments. Capital has been the dictator for many long 
years,' in consequence of which it has reaped a rr.ch harvest of 
wealth. Labor has turned now, with the desperation of long 
continued spoliation, and unless given at least a poi'tion of its-. 



218 PHILOSOPHY OK TRICE. 

just dues may soon break loose and no one can tell the destruc- 
tion that may follow. There is at the present time a most bit- 
ter hatred existing among the poorer classes of our people 
toward the law-pampered aristocrat and millionaire. This hatred 
will find vent at no distant day if not prohibited jby just 
counsels and fair legislation. 

Our laws are oppressive towards the poor, and generally 
operate in favor of capital. There can be no denial of that fact ; 
and until they are changed it is useless to theorize upon the 
matter. We have had a dear dollar and a cheap day's work 
long enough. The people are getting tired of it. They demand 
a cheaper dollar and a dearer day's work. Who can blame 
them, and why should their demand be denied after having 
given the contraction and "hard pan" policies of the govern- 
ment a fair trial ? 

When the services of a skillful physician are required he 
first makes a careful diagnosis of the case in order that he 
may locate the disease. He compares the patient in health 
with his present condition. The difference between the two 
conditions is the malady. Now, if he should locate the disoi^ 
der in the head, would he i^rescribe for the feet ? or if in the 
lungs, would he give remedies for the brain ? Under such 
treatment the patient would die, and the physician would be 
disgraced. The true practice would be a thorough treatment 
of the parts afflicted, to the end that they might be restored to 
their normal condition, in which they could, with the other 
members of the body, pei'fonu the usual functions necessary 
to health and life. 

In applying the same rule to our body politic, we find, in 
1866, health and vigor in every part of the' system. Business 
was good, wages were high, and money plenty. People were 
out of debt and all were contented, prosperous and hajipy. In 
1886, twenty years after, we find the debts of all kinds in the 
nation equal to ninety per cent of its equalized valuation. 



CONCLUSIONS. 219 

We find all business nearly at a standstill ; low prices and no 
work ; our country full of tramps ; our jails and poorliouses 
filled with those unable to find labor. We see want and distress 
on every hand. Labor strikes and riots are of daily occurrence 
and seem to be on the increase. The body politic of our nation 
is sick. It is stricken with lingering disease. Where is it 
located, and what is its nature ? 

The blessings of Deity — sunshine and rain, day and night, 
summer and winter, seed time and harvest, health and 
energy — are granted us now as they were twenty years ago. 
Our people are as industrious, intelligent and economical now 
as then. The earth yields as rich harvests; the herds and 
flocks are as prolific. All other bounties of nature are as 
abundant as ever before. The reward of labor in gross pro- 
duction never was greater than at present. We may search in 
vain through our whole economic or social system and we can 
find but one factor in the entire range different at this time 
from twenty years ago. Then the people had fifty and one- 
half dollars per capita to do business with, while to-day, at the 
outside, they have but $8. This is the root of the disease, the 
one great factor in all tliis present disorder. For twenty years 
contraction has cursed our land until it has gradually dried up 
the fountains of our prosperity. The trail of this serpent can 
be clearly traced by the bleached bones of its bankrupt victims — 
109,000 in 20 years. Can the misery and despair of these 
unfortunates be measured in money ? l^o wonder Mr. Shella- 
barger said : 

"They — the money-loaners — are seeking to coin the gains 
of their infamy out of the blood of their sinking country." 

Mr. Kellogg .said : 

" Mr. Chairman : I am pained when I sit in my place in 
the House, and hear members talk about the sacredness of cap- 
ital ; that the interests of money must not be touched. Yes, sir; 
they will vote six hundred thousand of the flower of the Amer- 
ican youth for the army, to he sacrificed, without a blush, but 



220 PHILOSOPHY OF I'KICE. 

the great interests in capital must not be tonclied. We have 
summoned the youth, cmd they have come. I would summon 
the ca])ital; and if it does not come voluntarily, before this 
Republic shall go down, or one star be lost, I would take every 
cent from the treasury of the states, from the treasury of cap- 
italists, from the treasury of individuals, and press it into the 
use of the Government." 

"We should call a halt ; demand that the conditions under 

which we were jDrosperous and happy should again be restored, 

and that -at once. 

" Money is the life-blood of business. Make it plenty, all 
business prospers, and working-men are employed at good 
wages. Make it scarce, all business languishes ; merchants 
become bankrupt and laborers are starving. Who don't know 
this?" 

We are encountering the same difficulties which all 
nations, in all ages past, have met, when the money of account 
has been contracted beyond the reach of the people. Its path 
has been strewn with wreck and ruin, until nothing written in 
the pages of history is more plainly seen than the black pall 
which has followed every attempt to wrong the people by 
enhancing the value of money. A proper amount of cun-ency 
will regulate the equilibrium between the rich and poor, liigh 
and low, visible and invisible capital, when all class laws and 
regulations fail. 

I quote from the report of the Silver Commission : 

"During certain periods in the past, when prices have 
been falling by reason of a shrinkage in the volume of money, 
a slow and toilsome advance has been made in the accunnila- 
tion of wealth. Under such conditions its just distribution is 
impossible. A shrinking volume of money and falling prices 
always have had and always must have a tendency to concen- 
trate wealth, to enrich the few, and to impoverish and degrade 
the many. This tendency is subtle, active; and portentous 
throughout the world to-day." 

Whenever a monopolist gives public expression to his 
ideas, he always pleads for the laborer, that a cheap dollar is 
his continual curse. This is only a pretext. Capital wants a 



CONCLUSIONS. 



221 



dear dollar that it may compel clieap labor, while labor wants a 

cheap dollar that it may increase the value of its earnings. 

Upon this point I will give the following illustration : 

" Be it remembered ever that the legal, debt-paying value of 
money never changes, except to exist and not exist. The legal, 
debt-paying properties — the property imparted by the law- 
making power that creates money— :never fluctuates; it is 
stationary, year in and out. 

PROPOSITION DEMONSTRATED. 



"Wages per day. 


Cost of living, etc. 


Sum left. 


$1.00 
50 
25 

2.00 
4.00 


$0.75 
37i 
18f 
09f 
1.50 
3.00 


$0.25 
12i 
06i 
03i 
50 
1.00 



Suppose a laborer had a mortgage of $1,000 on his home, 
which he desired to pay as fast as his earnings accumulated. 
Let us notice how high wages and high cost of living compares 
with cheap labor and cheap cost of living, in the amount of his 
yearly payments : 



Sums left. 


Iowa rate 
10 per cent. 


Year's work. 


Yearly 
interest. 


Days needed. 






Days. 






$0.25 


$100 


313 


$100 


400 


m 


100 


313 


100 


800 


06i 


100 


313 


100 


1,600 


03i 


100 


313 


100 


3,200 


50 


100 


■ 313 


100 


200 


1.00 


100 


313 


100 


100 



Thus we see that, $1 per day and 25 cents " left," it takes 
400 days to pay the interest, for interest and debt — national, 
State and individual — must be paid out of "sum left" after cost 
of living is paid. This being the case, it taking 400 days to pay 
the interest and there being but 313 work days in a year, the 
debtor finds himself "short" 87 days. This is deferred by 
"credit note." But the next turn of the thumbscrews of con- 
traction finds him short 487 days, which means credit gone 
for a chattel-mortgage substitute. 

The next turn toward "hard-pan" finds the debtor "short" 
1287 days. This means a mortgage on everything, as well pres- 
ent as future. 

The next turn reaches out to "specie basis" and " resump- 



222 PHILOSOPHY of price. 

tion,"'' and the court of last resoi-t — the hio-li sherilf ({) — bids 
the debtor go! in the name of law, good order, and the 
Christian teachings of the nineteenth century, ont into God's 
land, if he can find any that monopolists have not gobbled ; or 
go, as the tramp, branded by law. 

But of the up-turn to $2 per day, the "sum left" at 
this price, he pays his interest with 200 days' work, and has 
113 left to work for wife, babies, home, improvement, with 
something to spare to pay the principal of debt. 

But of the up-turn to $4 per day he pays his interest with 
100 days' work, and has 213 left to aj^ply for God, home, and 
humanity. 

This means the debt honestly paid, the mortgage canceled, 
hopes realized, wife cheerful, children gay, hearthstone loves 
brightened, family educated, society built up — a better citizen — 
a man." 

I quote the above from a speech by the Hon. L. II. Weller 
of Iowa. Comment is unnecessary. 

Again, when low prices are paid for labor, the prices of 
products are proportionally low. It is, therefore, generally 
supposed that the laborer can as readily procure all needful 
supplies when labor is at a low price, as when it is at a 
liigh one. But the articles whose price is diminished by the 
lowering of labor, are the productions of labor ; and the pro- 
ducing classes suffer great injury from this depression of both 
their labor and products. 

The following illustration will exhibit the advantage 
of high prices for labor. A man raises a hundred bales of cot- 
ton, sends them to market, and receives three and a half cents 
per pound. A laborer in New York receives fifty cents a day 
for his labor ; with a days work he can purchase fourteen 
pounds of cotton. If labor be at a dollar per day, and cotton 
at seven cents per pound, with a day's labor he can purchase 
the same quantity. If labor rise to a dollar and fifty cents 
a day, and cotton to ten and a half cents per pound, a day's 
labor will still purchase fourteen pounds of cotton. Thus far 
we do not observe the difference of price to have any influence 
upon the ability of the lal)orer to purchase ; but wo have yet 



CONCLUSIONS. 223 

to notice the condition of tliat class of producers wlio raise the 
cotton at the iirst price, three and a half cents per pound. 
After paying for the use or rent of the plantation one-half the 
price at which a loan of money can be obtained, say three 
or four per cent, interest on the cost of the plantation, they do 
not earn fifty cents a day, but, in fact, receive little or no com- 
pensation for their labor. The same labor and land are required 
to produce cotton when it brings three and a half cents, 
as when it brings fourteen cents per pound. Suppose a work- 
man in ISTew York to buy cotton at fourteen cents per pound ; 
a barrel of flour at $8 ; wheat at $1.50 per bushel ; potatoes at 
•iO cents ; brown sugar at 10 cents ; boots at $3 a pair ; brown 
sheeting at 10 cents per yard ; and good calico at 12 cents per 
yard. If labor falls to 50 cents per day, and he have full em- 
ployment, to be as well off as when labor was at $2 per 
day he must buy flour at $2 per barrel ; wheat at 3Y 1-2 cents 
per bushel ; potatoes at 10 cents ; brown sugar at 2 1-2 cents 
per pound ; boots at Y5 cents per pair ; brown sheeting at 2 1-2 
cents per yard ; calico at 3 cents, and everything else in jDro- 
portion. Traveling expenses, rents and taxes must be diminished 
three quarters. All the necessaries of life must be reduced in 
price three quarters, or the laborer who is out of debt will not 
be as well off when labor is fifty cents per day, as when it is at 
$2 per day. But suppose one class of the laborers to buy 
at tliese low prices, what will the producers of wheat, etc., 
receive for their labor ? The reason that the laborer can buy 
as much cotton when labor is at fifty cents per day, as when it 
is at $2, is, that he buys a fellow-laborer's products at a price 
which will not pay a cent a day for the toil of producing them. 
So, when the prices of labor are reduced in this ratio, laborers, 
as a body, are unable to provide themselves with the necessaries 
of life, and sparingly live upon the meager fruits of each others 
toil. The reduction of the prices of labor and products, conse- 
quent upon a scarcity of money aud a rise of interest, forces 



224 PHILOSOPHY OF PRICE. 

proflucer.s and merchants to suffer great losses, because the 
diininution of the prices of products does not diminish the 
amount of their debts, nor their legal obligations to pay them ; 
while the capitalists who own these debts will compel laborers 
and owners of land and products to sell double, treble, and 
(juadruple the quantity of these, to obtain money to satisfy the 
debts. Thus wealth passes with great rapidity into the hands of 
a few capitalists. If the merchant has bought goods at as low 
a price as they can be afforded l)y the manufacturer, it is no 
safeguard against loss by the fall of goods in the market, 
because the market-price of the goods does not depend upon 
the labor necessary to their production, but upon the ever- 
\'arying value of the dollar. Our laws make the dollar the real 
value, or standard of payment, and producers and all kinds of 
property are controlled by its power. 

The objection is often urged, that to make money plenty 
would destroy the value of products. But how would or could 
it destroy their value to allow the needy to earn the means 
to purchase them ? Will not a starving people buy products 'i 
Does anyone suppose that the people of Ireland would live 
upon their present scanty food, if their labor would afford 
them the means of purchasing more and better? Was, there 
ever a bad market for products wdien labor was receiving what 
are called high prices, or a good market when labor was at a 
low price ? The market is made poor by the inability of the 
laboring community to earn enough to make purchases. If 
labor were well paid, the market would always be good, and 
the laborer, assured of a just reward, would work cheerfully. 

Large production, at a fair price, gives a better compensa- 
tion to producers than half production at a double price. The 
families of producers require as many products for their own 
consumption when the crops are diminished one-half, and their 
price is doubled, as when products are abundant. The pro- 
ducers cannot then si)are a sufficient quantity to sell for their 



CONCLUSIONS. 225 

usual profits, even at the increased price, and capital makes the 
same requisition upon their labor for rent or interest as if their 
crops were abundant. 

It is a solemn truth that hard times fill up alike our poor- 
houses and jails ; that these periods of financial depression not 
onlj bring more poverty, but increase crime. It is plain enough 
when understood. 

When hard times begin to press upon an individual, and 
retrenchment of expenses are commenced, the moral luxuries 
go first. Next follow his intellectual luxuries; lastly he cuts 
off personal luxuries, and gradually little comforts of life are 
dropped one by one, until the struggle for the bare necessities 
of life takes the place of all. The moral, social and intellectual 
conditions are sacrificed to the physical. 

From this condition come poverty, helplessness and crime 
from despair. "When, for any reason this condition is bettered, 
the same route is traveled back, starting through individual 
comforts, then to intellectual luxuries, and finally to moral 
obligations and a higher life. 

' 'Talk to the winds and reason with despair, 
But tell not Misery's sons that life is fair." 

History proves these propositions true, and the experi- 
ences of an ordinary lifetime confirm them. 

I would not be understood that the poor are wanting in 
these virtues, or that they are debarred from acquiring them ; 
but I do say that poverty and deprivations are not promoters 
of moral and social advancement — that the over- worked, ill- 
fed, distressed individual, whose whole time is occujiied in 
"bread winning" is in no condition to discuss, much less to 
participate in the higher moral and social attainments. Life, 
to them, is but a continual fight to supply the demands of 
nature, with no place for elevating or refining sentiments. But 
in direct ratio as the battle for life is lessened, and physical 
energies are relieved from the constant strain of production, the 



226 PHILOSOPHY OF PRICE. 

molding influences of civilization are seen to And lodgment. 
We are all creatures of circumstances. Our welfare depends 
upon the rules of society, or rather the customs of our asso- 
ciates, the regulations and restrictions of law, and our own 
ability to interpret them. The importance, therefore, of salu- 
tary laws, and their proper adaptation to the circumstances and 
conditions of those whose conduct is sought to be directed, is 
of the first consideration. While Governments do not point 
out to each individual the course he shall pursue, they should 
make such general restrictions that all might fully and equally 
act within their limits. These restrictions, in a government 
like our own especially, are for the greatest good to the great- 
est number. 

The great bulk of our people are producers. Almost sixty 
per cent, are wage-workers. The proportion of rich to poor is 
as 6 to 94. This being true, then our laws should be so framed 
as to benefit the poor as against the rich, to protect the weak . 
against tlie strong. That this is not the case, that our laws are 
not so constructed, we have but to glance about us for proof. 
We can discern at once that something is at fault wdth our 
economic system. That fault, in my opinion, is due to a misap- 
prehension of money functions, or to a willful mismanagement 
of our circulating medium. The great difference between the 
extremes of poverty and prosperity in this country is wholly 
due to tlie condition of our currency. What is commonly 
called "good times" are periods when the quantity of money 
is rapidly increasing. Bad times come Mdien tlie quantity is 
diminished or at a standstill, or not increasing as fast as the 
population and needs of business require. 

The history of civilization shows that the fall of Rome 
and the subsequent elimination of nearly all the civilizing in- 
fluences were due almost entirely to the failure of the mines 
from which it derived its currency, paper substitutes being 
then unknown ; that the first glimmer of returning lio])e was 



CONCLUSIONS. 227 

co-incident with the discovery of paper money, wliich, after 
several evolutions, was put in the form of bank paper for the 
first time in Sweden, in 1658. From that day to the present, 
the nation using the cheapest unit as a standard of payment, 
has prospered the greatest. 

A standard of value is like the money of the world, an 
impossible something, which is made use of by demagogues to 
frighten or mislead the people. If we are to have either silver 
or gold as the standard of payment, let us by all means take 
silver. All countries prosper where debts must be paid in the 
cheapest standard of payment. This means dear labor, dea\ 
productions, and cheap payments. 

The curse of all monetary systems, at the present time, is 
caste. There is in every nation a money unit for the rich, and 
a money unit for the poor. We have it. England, France, 
Germany and other Nations have it. Why is copper, nickel, 
and all subsidiary coin not a full legal tender ? Not for the 
reason advanced by many, that in payment of debts men 
might misuse the privilege and load down the creditor with 
large amounts of this coin. No ; far from that being the true 
answer. It is because a large majority of the people are poor 
and can use but small amounts at best. Why is silver used in 
India? Because no gold coin could be made of small enough 
value to even pay for labor ; it is so cheap. Gold is found in 
use with diamonds, silks, satins, palatial residences, etc., while 
the use of silver is discovered among rags, hovels, want and 
wretchedness. The United States is one of the greatest silver 
producing nations in the world. As one of our precious met- 
als, it should be used as money to a much greater extent than 
gold. By our laws, but two million dollars each month is per- 
mitted to be coined. Silver, being one of our staple products, 
if not wanted at home, goes abroad like wheat or meat, but 
with a far different purpose. Other products of export are 
sent abroad to be consumed, while silver is bought from us to 



228 rHILOSoPIIY OF PRICE. 

be used principally as money. This silver goes to tliose nations 
where silver is iisc;l as the circulating medium, and assists in 
building up in;]uotries to com})ete with our own. Large 
amounts of our bilvcr has found its way to India. By the use 
of it, India has so improved her condition in regard to produc- 
tion, tliat to-day wheat can be laid down, duty paid, in New 
York, from that country, cheaper than from Dakota. A con- 
tinuance of this will not only deprive us of our wheat market, 
but wool as well ; and the solenm fact presents itself to the 
minds of every one that the silver using countries do now, and 
will in the future, compete successfully with any and all 
nations using gold. 

When we attempt to cry down the value of silver, we are 
injuring one of the large factors employed in the accumulation 
of our own wealth. Besides this, it is a downright injury to 
all other forms of wealth below it, and a benefit to all forms 
above it. Thus we see that the depreciation of silver depre- 
ciates every other j)roduct but gold, as gold is the only produc- 
tion more valuable than silver intrinsically. 

Just so long as we undertake to j^ut into practice that 
worst of all ideas, a standard of values, just so long will the 
higher valued products measure the lower. The large pocket 
book governs the smaller, and the rich will rule the jjoor. 

At the present time there is much said and written about 
the shrinkage of values. There has been really no shrinkage 
of values, but there has been an increase in the measure by 
which values were estimated. Some well-disposed, but extremely 
ignorant persons have introduced a bill in Congress to establish 
a uniform standard of value, hoping thereby to avoid these fluc- 
tuations. Tlie Pope's bull against the comet was sound logic com- 
))ared to this. In doing so, legishition seeks to establish an 
utter impossibiHty. As I have said repeatedly before, there 
can be no such thing as a standard of value. That, with the 
m;n-k('ts of tlie world, the money of the world, and the pliilos- 



CONCLUSIONS. 229 

opher's stone, all belong in the same category of ancient fables. 
Coins are not standards of value, but standards of payment. 
The only measure of value is the money of account, that 
abstract thing, the dollar, of which we talk so much. Value 
is an abstract, intangible something that can not be measured 
by a concrete tangible something any more than an idea can be 
measured by a quart cup, or a sentiment by a foot rule. The 
difference between a standard of payment and a standard of 
value is this : 

A standard of payment is a certain legally authorized 
amount of specified commodities which are the basis of all 
debts or agreements, and are received in liquidation of the 
same. The standard of payment in this nation is a specified 
number of grains of gold or silver. 

A standard of value is a commodity value, ascertained by 
the relation which the standard of payments bear to it and all 
other things. It is an assumption, having no existence either 
in logic or fact. The only manner in which value is ascer- 
tained is by a comparison with the standard of payment. The 
word, standard, means stable, solid, unchanging. There never 
was a commodity of value in the world that was not constantly 
changing as its conditions to other commodities changed. The 
standard of jDayment cannot be a standard of value, because 
the value of that standard has always been, is, and always will 
be, fluctuating. The value depends upon its amount and the 
demand. 

Yalue is an abstract idea, like goodness, idleness, labor and 
the dollar. Who ever saw a day's work or handled a dollar? 
Who ever bought a pound of goodness, or a foot of idleness ? 
To have a standard of value it would be necessary to find some 
product that never varies in value. Where can it be found ? 
We have a standard of length in the twelve inches to the foot ; 
of weight, in the sixteen ounces to the pound ; of time, in the 
sixty seconds in a minute. Who ever purchased either of 



230 PHILOSOPHY OF PRICE. 

these ? and yet, they are real products as compared to the idea 
of a standard of value. We have a standard for length in the 
foot. It will r.i:;.,-ure distance, it will measure timber, cloth, 
etc. The pound woiglit will measure gold as well as wheat. 
The ffallon will measure water as well as wine. 

But in the standard of the measure of value there must 
be something found that can be applied, at any and all times, 
to any and all substances to determine their value with unvary- 
ing minuteness. Will a certain number of grains of gold or 
silver determine . the value of the cargo of lumber, the cargo 
of wheat, or the cargo of molasses ? How can 23 22-100 grains 
of gold do all this? How is it applied? If this amount of 
gold should become more valuable from scarcity, as it is now, 
the measure would be too large. If it should shrink in value, 
the measure would be too small. In fact, as before stated, 
there is no standard of value. Money is simply a standard of 
payment. Yalue itself cannot be measured ; it can only be 
determined approximately by comparison. Quality cannot be 
measured by quantity. The abstract cannot be obtained by 
applying the concrete. There may be different degrees of 
quality, but not an increase or decrease of amount. 

After all, the two great objects of law are the protection 
of life and the proper distribution of wealth. In fact, a just 
distribution of wealth itself would be one great factor in the 
protection of life and the prevention of crime. The lust for 
money is the foundation of and incentive to much of the crime 
connnitted, for which the human family is guilty. One potent 
agent in the equalization of wealth is taxation. A graduated 
income tax, increasing with the wealth of the individual, would 
not only be just, but would do much toward bringing about 
tliis result. When a man becomes able to command the power 
of one hundred tliousand dollars in wealth, he at once becomes 
a menace to the state and the just application of law. This is 
true in the nature of things. His influence, in so far as his 



CONCLUSIONS. 231 

money.goes, is equal to, and by virtue of its concentration, 
much greater than that of the 325 pauper neighbors that his 
accumulation of wealth necessarily brings into existence. Very 
few men are punished for crime who are worth this sum of 
money. 

JSTow, if we should abolish all internal revenues ; limit 
duties or customs to an amount that would protect labor and 
the products of labor from unfavorable competition on our 
own soil ; then put such an income tax on the production of 
wealth as would make it unprofitable to be worth more than 
$100,000, I think the question of the just distribution of 
wealth would be much less difficult of solution. Let the in- 
come tax be so arranged that all the profit of business above 
the legitimate earnings of $100,000, be paid over to the na- 
tional Treasury. Then millionaires would soon cease to curse 
our land. 

There is nothing more disastrous to the nation than large 
accumulations of wealth. I do not wish to be understood as 
making war on capital, or not upholding a just emulation in 
the acquirement of wealth, but I do wish to convey this — 
that the laws of distribution should take from money its power 
of attraction to other forms of wealth ; that is, I would elim- 
inate the idea from the minds of men that " it takes money to 
make money," as they now express it. I would substitute 
instead the plain fact that it takes labor to make money. And 
I would so frame our economic laws that when men labor — no 
matter if they are foolish and ignorant — the result would show 
that labor did bring a reward. If after the reward was earned 
men squandered it, the assumption should not follow that by 
reason of this they should not be permitted to earn it. I would 
not bring in the fact of a man's incapacity to hoard money as 
the reason for not giving him the opportunity to earn it. 

When one man goes to his grave worth ten million dol- 
lars, and his neighbor, who has been equally industrious, is 



232 PHILOSOPHY OF PRICE, 

buried at the public expense, it shows on its face an unjust dis- 
tribution of the fruits of labor. I do not subscribe to the 
doctrine that what one man gains another loses, because we are 
producing wealth all the time through the medium of invisible 
capital. This would be true, however, if wealth was stationary. 
But I do claim when a man produces wealth through his own 
labor, the economic laws of the land should be so framed that 
he may retain peaceable possession of it. As Thomas Paine 
says in his Eights of Man : "When the old men go to the 
poorhouse, and the young men to prison, something is wrong 
with the economic system of the nation." 

At the present time there is a general desire among all 
nations, to iind some remedy for the increasing dissatisfaction 
so manifest with the laboring classes. Opinions upon this sub- 
ject are widely at variance. Neither employer nor employe 
can answer the question satisfactorily, even to themselves. The 
Knights of Labor, that grand organization for good, are not 
quite a unit as to the real difficulty. This Brotherhood, so 
well disciplined, so powerful, backed up as it is with a sense of 
justice and right in its cause, will fall to pieces, and that soon, 
if it does not at once state to the world some one great remedy 
for the complaints made. The long list of demands shown in 
their platform, will require years to legislate upon singly. If 
these charges are true, they are sim2:)ly ulcers upon our body 
politic. To treat them one at a time would be not only bad 
practice, but doubtless prove fatal. The proper course points 
to a thorough cleansing of the body, a powerful, searching 
purifier, that in its operation would rid the system of all this 
poison, and drive out all extraneous matter. Is there not one 
great panacea that will, in the proper course of its action, rem- 
edy the larger part of these evils ? I think there is. Let us 
make the search. In previous chapters I have pointed out the 
causes for all these troubles. I have shown the attitude of 
Cn]Mtal and Labor. I have endeavored to treat the matter 



CONCLUSIONS. 233 

fairly, to give facts and figures, as well as the opinions of 
others to sustain my position. 

The remedy, in my judgment, does not lie in labor laws, 
tariffs, arbitration, poor laws, or anything of like character. I 
believe they will simply act as an irritant, and in the end do 
more harm than good. But I do believe that relief can be 
found in a proper regulation of our domestic currency. The 
point in the whole matter is money; the point on which it 
all turns is money ; and the object of all this strife is money. 
This being true, why not use that one factor to correct what it 
has misplaced ? Its possession or non-possession is the differ- 
ence between rich and poor — between starvation and plenty. 
Every proposition in this book, every quotation and every 
argument, points out the one complete and final remedy— an 
increciiie in the domestic cuTrency of our country. I have 
proven it by statistics, by the writings of the most eminent 
economists from the time of Aristotle to the present ; by the 
condition of our own country now, as compared with other 
dates ; in every manner and by all means by which a proposi- 
tion of this character can be substantiated, that a decreasing 
volume of money is a curse, while an increasing volume is a 
blessing. While it may not be true that the greater the amount 
of currency, the less earnest will be the demand, it is a 
fact that the less the amount the more eager each one is to 
obtain their full share or more. 

When the amount of any commodity is small or diminish- 
ing, every one interested in its use becomes at once anxious for 
present and future wants. If a prime article of necessity, it 
shows this anxiety in its higher commercial value. But if the 
same is in abundance, it becomes cheap, because consumers, 
aware of its abundance, are not in the least worried about 
present or future supplies. Just so with the volume of money. 
The one primal function of money which measures value, and 
the other bestowed function which pays debts, are both gov- 



234 PHILOSOPHY OF PRICE. 

erned by tlie same rule. They can botli be increased or 
decreased in their activity and power. Tlie same conditions 
that affect tlie price of commodities, govern the action of 
money. Thus, measures of value do not of themselves per- 
form the function of measurement, but are bought Math the 
products of labor, or labor itself, for the purpose of being held 
to measure the value of some other product more desirable to 
the holder than the product which he sold to obtain the meas- 
ures. For example, the farmer buys these measures with 
wheat, in order to sell them for a carriage. Of themselves, 
they are incapable of action, but are sought for in order that 
this particular function may be used, when occasion may 
require. Just so with the debt-paying power ; it is only put 
in force when debts are to be paid, and as every business trans- 
action necessitates an obligation, this function is continually 
being used. Now, with plenty of these measures of value in 
sight, people would not be anxious about their ability to obtain 
them when wanted. Equally true with the debt paying func- 
tion ; with an abundance on hand which could be had in ex 
change for a reasonable amount of labor, no one would be 
troubled. 

The more products to measure, the more measures would 
be necessary. Also, the more business transactions to complete, 
the more debt-paying factors would be needed. An increase of 
production or of business not only calls for more money for 
the aljove reasons, but urgently demands it. A less amount of 
products or business transactions would require less currency. 
It is a settled fact among economists of all nations that money 
becomes more valuable at some times than at others, that it 
increases and decreases in value under certain conditions. This 
change in value is only obtained by comparing it with labor 
and its products. This comparison has brought out the fact 
that money is more valuable when its quantity is decreasing or 
remaining stationary, while the demand for it is increasing. 



CONCLUSIONS. 



235 



Also, this rule invariably shows labor and its products in 
conjunction to bring lower prices. The history of the financial 
world proves this to be true. Continuing to make money 
less in amount, would as steadily make it more valuable, 
and, following out the rule, would lower the price of labor 
and all its products. Eliminate all money, and commercial 
values would cease altogether. Labor value or barter would 
then take its place. On the other hand, increase the amount 
of domestic currency, and this measure will decrease in value 
and at the same time increase the money value of all labor and 
production. Continue this increase indefinitely, and in the end 
money value will become an absurdity and cease, which would 
bring about the same result, a resort to barter or labor exchange. 
Here we find an example of arriving at the same point from 
opposite directions. This would seem to imply a middle 
ground, alike honorable and just to both contestants. 

It is evident that the quantity of domestic currency alone 
is master of the situation, and is the only remedy that can be 
applied. This never can be accomphshed by granting the 
power to issue currency to corporations, or trust to the judg- 
ment of men in high positions. It must be a per capita 
amount, increasing with population. Make the amount sufii- 
cient to place capital and labor on the same footing. In other 
words, make dollars as plenty as days' work, and confine them 
to the same power of accumulation. 

There is but one way to bring about this result, and that 
is through the increase of our domestic currency to that extent 
that its very abundance will make it less valuable. If, by acci- 
dent or design, the laborer fails to perform the days' toil, it is 
lost to him forever. I would have money so constituted that 
it would bring in no remuneration unless actively engaged in 
exchanges. That can be done by making it so plenty that the 
surplus beyond that actually in use will be the same as so much 
produce unsold. I do not conciir in the idea of eliminating 



236 PHILOSOPHY OF PRICE. 

interest in financial matters. Men do not object to the pay- 
ment of fair interest, bnt tliey do rebel against returning a 
more valuable dollar than tliey borrowed. 

Increase the volume of domestic currency to such an ex- 
tent that a dollar will sell for a just r nd reasonable amount of 
labor or its products, and that point in our economic affairs 
will have been reached where tramps will be seen no more, 
labor strikes will cease, and the smile of happiness will once 
more be seen on the face of the toiler. We shall then be 
standing on that honorable middle ground which is so necessary 
to the prosperity and comfort of all nations. 

Make this amount, as I have said before, mandatory, so 
much per capita, and to increase each year with the increase 
of population ; then prices would fluctuate only from the effect 
of supply and demand, which would soon regulate itself. 

With this arrangement banks of issue would be abolished, 
and our domestic currency come to us direct from the Govern- 
ment. 

Finally, in conclusion, repeal the internal revenue tax. 
Enact a vigorous income-tax law, increasing with the amount 
of income. Reduce the tariff to a i-evenue basis, and give 
labor all the protection which that would afford. At the same 
time issue gold and silver certificates, to which add greenback 
paper money, each and all a full legal tender for all debts, pub- 
lic and private, to the full amount of $50 j^er capita of popula- 
tion, that amount to increase as population increases. This 
would, in my judgment, put labor and capital on nearly an 
equal footing, and bring prosperity and happiness to the people 
of this nation. 




"^IST 



xwmm^ 239 



APPENDIX. 



LABOR 

A LECTURE DELIVERED BY N. A. DUNNING AT THE FARMER's 
INSTITUTE, HELD AT MASON, MICH., EEB, 11, 188Y. 

The question of Labor which I shall attempt to discuss at 
this time, is older than the universe, as far-reaching as liuman- 
ity, and as little understood as the most marvelous works of 
God. It has occupied the mind of man since man was created, 
and will continue to demand recognition until heaven and 
earth shall pass away. The idea of labor at the present time is 
associated with but a portion or class of our people — -those who 
are compelled to work for the necessities and comforts of life, 
and those who, for other reasons, choose to do so. It represents 
an. undesirable condition of existence from which all humanity 
seeks to be freed — either at once, or when some cherished pur- 
pose aas been accomplished. The man or woman does not live 
who desires to labor every day, in every year, of their whole 



24:0 PHILOSOPHY OF PRICE. 

sojourn on eartli. Such desire would be unnatural, a sin 
against the future and a libel upon the past. Nine-tenths of 
the labor performed at the present time is done with the idea, 
that this hard labor and toil will bring about future ease and 
comfort. Those who can live without labor, or, who can labor 
when they so elect, are envied these privileges by their less 
fortunate associates. This envy, this desire for like situation, 
has led to war, bloodshed, riot and ruin. It has been the fruit- 
ful source of the greater part of the misery and woe which have 
overtaken mankind since the beginning of the race. 

If the present differences in the human family, regarding 
this question, were intended in the plan of creation, if a portion 
were to toil at pain and sorrow that others might live in idle- 
ness and pleasure, then it is the w^ll of God, and we should sub- 
mit. But, if these differences were not considered in the great 
scheme of humanity, they are among us through the perversion 
of natural laws, and our duty to each other, as well as the obli- 
gation we owe our Creator, demands, alike, they should be 
eliminated^, 

" In the sweat of thy face shalt thou eat bread," declared 
an outraged Jehovah ! Did that apply to only a portion of the 
human beings who were destined to people this earth ? Or, 
was not the entire human family, from Adam to the babe born 
but yesterday, included in this declaration ? Common sense and 
a fair interpretation of the intent of Providence would answer 
that it was a condition put upon the race without exception — 
that none bearing the human form was exempt from its obli- 
gations. This fiat demanded that all should support their 
bodily natures through [Nature's own exertion — Labor. 

This was the primitive condition of labor ; it knew no class, 
it recognized no exceptions, it made no distinction. Labor ajul 
humanity started out together, hand in hand, to fight the groat 
battle of life, each being dependent on the other and botli 
conscious of the mil of its creator. Since that time, wlio can 



APPENDIX. 241 

mark tlie changes, who can portray the vicissitudes through 
which both have passed ? ISToah and the dehige ; Abram and 
his offering ; Solomon and his wisdom ; Christ and Mount Cal- 
vary ; the splendor of Rome ; the horrors of the Dark Ages ; 
Martin Luther and the Reformation ; King John and the 
Magna Charter ; Columbus and the Discovery of America ; 
the war of the Revolution, and the founding of our own great 
nation — through all these human nature remains the same, 
dependent now upon labor as in the primal hour of its exist- 
ence. But the conditions under which this relationship exists 
have undergone a wonderful change. Then it was a companion 
of labor, a sharer in its joys and sorrows ; now it commands, 
it coerces, in a word it has become the master. What has pro- 
duced this change, and how to better the situation, is the Alpha 
and Omega of the labor question. 

In the primitive state of our race, men labored, simply for 
personal or family wants ; there was neither commerce nor 
exchanges. Each produced what would satisfy, and each 
enjoyed the full benefits of his labor. We style these people 
barbarians, and shudder at the thought. Why ? Because they 
could not read or write ? or, wear diamonds and silks ? or, get 
drunk and swear in five or six different languages ? Are these 
among the reasons ? If not, what are they ? A few things were 
true, however, of harharism. If a man made a coat, it was his; 
he was not obliged to sell it to pay interest, or hide it from the 
tax-collector. If he planted a field, he was not compelled to 
eat the refuse and sell the best to pay rent, or make a payment 
on the mortgage. If they were without schools, churches, and 
railroads, it is no less a fact they were wanting in prisons, 
poor-houses and tramps. They are called cruel, blood-thirsty, 
and possessing none of the finer sensibilities which mark the 
progress of civilization — that their hopes in a future life were 
blasted by their condition. 

How long since this great nation, the most civilized on 



242 PHILOSOPHY OF PRICE. 

earth, was plunged in fraternal strife, where brother sought the 
blood of brother, and friend the life of friend ? 

Even to-day the whole earth is bristling with bayonets 
and rumors of war are heard at every turn. Beside, who would 
not rather stand in the place of an ignorant barbarian in the 
Day of Judgment, than a civilized hypocrite ? Pope says, "All 
nature's difference makes all nature's peace." That may be 
true in nature ; I doubt if it is in man. If civilization could be, 
as no doubt it was intended, a blessing to all alike, it would be 
pleasant Ijo contemplate, but when we see its advantages granted 
to the few and witheld from the many, there do come up feel- 
ings of doubt and disappointment. It must be remembered, 
that a people can not be better taught than fed ; that constant 
physical exertion in production, is not only a hindrance but, in 
a majority of cases, a positive check to moral and social culture. 
The laborer, by reason of his being a laborer, is denied by the 
logic of events to share in this higher civilization. 

The condition of the laborer not being bettered, must as a 
natural sequence become worse ; and society to-day presents 
the melancholy spectacle of a small portion of our people 
climbing higher and the greater portion going lower on the 
social ladder. This is not all ; the whole fabric of civilization, 
all its advantages, all its various adjuncts, all things that in any 
manner contribute toward progress and higher life, are the di- 
rect results of labor. J^othing but its constant efforts produced 
it, and nothing but its continued efforts will maintain it. Labor 
and that alone can support what it has brought into existence. 
It can not be ignored ; the time has come when it must and 
will be heard. It stands to-day on the threshold of future 
progress and further advancement, and sternly demands of us, 
of you and me, "Shall my efforts in time to come be free or 
enforced ?" The fate of the civilized world depends upon the 
answer. The people of this generation must decide, and the 



APPENDIX. 243 

J^ineteenth Century must declare it. "We who enjoy great 
privileges are no less burdened with great responsibilities. Let 
us consider well how we discharge them. Labor must be free 
or enforced. The usual picture of enforced labor shows a 
fierce looking white man driving forward in their work a num- 
ber of miserable looking black men. Happy, indeed, the world 
would be if it ended here. It does not. It represents the fair- 
est part. The reverse of the picture presents to our view the 
great struggling mass of humanity, urged on by some unseen 
power, working, slaving, toiling day by day, bringing into 
existence untold treasures of wealth, but are permitted to enjoy 
but a mere per cent. 

Economists all agree that labor is the sole producer of 
wealth. If this proposition is true, why does not the producer 
of this wealth possess it after production ? What intervening 
cause steps in between the producer and" this wealth and 
prevents his owning and enjoying what his brain and brawn 
have created ? l^o one seems to question the right or justice of 
each individual enjoying the fruits of his own labor. But to 
recognize this right, however, does not explain the reason why 
production and possession are separated, or what line of action 
would remedy the evil. At this point all labor discussion must 
begin, and thus far all theories have had their end. I believe 
that labor is being enslaved, being spoiled of its reward through 
the laws governing land and currency. " Whoever owns the 
land owns the people" said John Locke ; and "whoever controls 
the currency of the nation rules the people" said President 
Garfield. All production is from the earth, and all business is 
through the medium of currency ; therefore make one cheap 
and the other plenty in order to bring prosperity. 

Let us return again to barbarism. Then nothing but labor 
value was considered. How much warmth will it secure ? or, 
how many of the life-giving principles will it yield ? were the 
great questions. Soon barter and exchange of commodities be^ 



244 PHILOSOPHY OF PRICE. 

gan to take place between individuals and tribes. The fish of 
one section were exchanged for the fur of another section. It 
often became difficult to make these exchanges exactly balance. 
One class of products would possess more labor value than the 
other. For example, ten pieces of fnr would have more labor value 
than ten fish, but not enough for eleven. This made the bargain 
unequal and entailed a loss. After a time they began to use 
shells and beads to represent this difference in labor value. 
These shells and beads had no value of themselves, but by com- 
mon consent represented labor value. By and by some one 
hoarded up enough of these representatives of value to 
exchange entire for some of the fish or fur. Then the war 
between capital and labor began and has continued until the 
present time. The man with the beads and shells wanted all 
the fur and fish he could obtain for them, while the hunters 
and fishermen wanted to give him as little as possible. The 
self-same struggle is with us to-day. The shells and beads of 
l)arbarism are the prototypes of the gold and silver of civiliza- 
tion. The owners of these shells and beads of barbarism are 
identical with the banker and bond owner of civilization. The 
form and material have changed. The conditions and circum- 
stances of exchanges have differed since that time. But the old 
idea of barbarism, the relationship which these representatives 
of value bear to each other and to all created wealth has 
remained the same — has obeyed, all these years, the same gen- 
eral laws, and has been guided by the same unvarying rules. 
The same general laws govern the production and distribution 
of wealth to-day that did when production and distribution 
began. With an increase of these representatives of value prod- 
ucts are more justly distributed, labor is paid better, and pros- 
perity makes its appearance. With a decrease, exactly the 
reverse of this is effected. This has proven true in all ages of 
the world, and is proving true at the present time. Our land 
laws are the worst of any age or any nation. Other countries 



APPENDIX. 



245 



have been robbed of tlieir possessions by force and arms ; but 
to the American government alone belongs the disgrace, of 
knowingly, recklessly, and wantonly confiscating the rightful 
heritage of future generations, and passing them over gratuit- 
ously to heartless corporations. ISTo other nation would permit 
so vast an amount of its public domain to be owned and con- 
trolled by aliens. With our present population, land is becom- 
ing scarce ; what will be the situation at the next Centennial, 
with four or five times the number of people ? ISTo wonder the 
doctrine of Henry George is being thoroughly considered. Ko 
wonder the idea is beginning to obtain that no man has the 
right to own one acre more land than he cultivates. The total 
area of the United States is given at 1,814,000,000 acres. Of 
this amount 831 million acres have been disposed of. Sixty- 
five million acres of this large amount only has been taken 
under the homestead and timber-culture act. Prior to 1860 less 
than 28 million acres had been granted to railroads, canals, etc. 
Since that time there has been over 143 million acres given to 
these corporations, making a total of 171 million acres in all. 
Hundreds of millions of acres have been patented to individuals 
under Spanish and other foreign claims. In one instance 
2,714, Y65 acres was patented under one of these Spanish 
claims. In 1880 there were private land claims of this charactei^, 
amounting to 567 millions of acres on file in the land office at 
Washington. It has been discovered that more than ten million 
acres of laud have been stolen by the railroad companies by 
false measurement alone, and that more than 15 million acres 
of government land have been fenced in by herders and used 
as their own. Thirty-four alien land-owning syndicates own 29 
million acres of American soil. Let me give you the figures. 
The number of acres remaining unsold is 983 millions. Take 
from this the area of Alaska, 370 million acres, and we have 
613 milhon acres on hand. In this amount is included all the 
waste land of the nation — the swamps, the mountains, deserts 



24G PHILOSOPHY or pkice. 

etc. — which in the opinion of well posted men will reduce this 
amount by 400 million acres more. This leaves Imt 213 mil- 
lion acres for future generations to enjoy. Who can contem- 
plate these facts without alarm, or consider the statesmanship 
which has permitted this wholesale appropriation, without dis- 
gust ? Every acre of land taken in this manner makes it more 
difficult to obtain free homes, which of itself increases the value 
of the land already bought, and consequently lowers the price 
of labor, I believe no alien should own a single foot of 
American soil. I believe every railroad grant should be for- 
feited. All these vast tracts should be bougiit back by the gov- 
ernment, and every acre given to actual settlers alone. IS^o man 
has the right in justice or in fact to more land than he can 
cultivate, while his neighbor has none. 

Land, labor and currency are the three controlling factors 
of every government. With proper relations between each, 
prosperity always follows. With lack of harmony, adversity is 
sure to come. Labor is dependent upon land and currency ; 
therefore, whatever affects either is certain to be felt by labor. 

A stationary, inadequate, or shrinking volume of currency 
is productive of greater loss to labor than all other conditions. 
The invention of money has corrujDted the labor value of 
exchanges, the same as Satan corrupted the morals of Heaven. 
It took Michael and the hosts of Paradise to chain that mon- 
ster ; what will it require to bind the other ? Money in its 
primitive and beneficial condition was the instrument, the inci- 
dent, of exchange, but not the object. So long as it continued 
the instrument, the aid and friend, it benefited all conditions of 
men in a proper degree ; but when it became the object, the 
aim and prize, that moment it ceased to do good and began to 
do evil. Then differences in condition began to appear, master 
and servant began to be seen, rich and poor broke in upon our 
vision. All classes of men, and all the various kinds of busi- 
ness, are interested in this question. 



APPENDIX. 247 

The farmers are vitally interested in this question. In 
1866, the ten principal crops — wheat, corn, oats, barley, rye, 
buckwheat, potatoes, hay, cotton and tobacco — sold for $2,007,- 
462,231. In 1884, after a lapse of 18 years, these same crops 
sold for $2,043,500,481 ; only 36 milHons more after 18 years 
of labor and improvement — a gain of less than 2 per cent in 
production in 18 years. The number of acres cultivated was 
nearly doubled, the number of farms and farm hands were 
doubled, agricultural machinery was greatly improved, and yet 
the products of 1884 brought the farmer less than 2 per cent 
more than the production of 1866. 

The annual income of the fourteen principal States of the 
Union is about five thousand seven hundred millions. This is 
the estimated value of agricultural products and manufactured 
goods together. Of this total estimate, only nine hundred and 
forty-one millions is allowed for the products of the farmer and 
grazier and fruit-grower ! That means that the most absolutely 
necessary of all the industries receives for its annual share of 
the common increase of the land one-sixth of the entire home- 
made income of the nation. 

In 1870, the number engaged in agriculture was about 
seven millions. Those engaged in manufactures were about 
two millions. Since then the population of the country has 
increased from thirty-eight to fifty-two millions. The increase 
has been larger in the first class than in the second. The pro- 
portion of agriculturists to the other class is therefore not far 
from eight to two. Four times as many farmers as artisans, 
and these, receive only one-sixth of the national income from 
the two branches of industry. If four times six are twenty-four, 
then the farmer has one twenty-fourth of the annual benefits of 
industry and civilization, and the factory mechanic or artisan, 
or somebody else has the rest ! 

Some farmer will say we can buy more with a dollar than 
ever before. Can you pay any more debts ? Can you pay 



248 PHILOSOPHY OF PRICE. 

any more interest ? What will it purchase more of ? Nothing 
but the fruits of someone's else labor. 

One common error which the world has fallen into, and 
which leads to many other mistakes, is that money buys prod- 
ucts. Products always buys money instead of money piw- 
chasing products. The application of low wages proves this 
conclusively. Low wages or prices, in most cases are the result 
of competition among laborers or producers for money. The 
one who will pay the most for it, that is will part with the 
greatest amount of labor or its products for the smallest 
amount, gets the money. With money for any length of time 
the object and not the instrument of this competition, com- 
merce or exchange becomes a species of coniiscation as it now 
is. It means the products of one set of laborers competing 
with the products of another set of lal>orers ; and money feast- 
ing and enriching itself on their disasters. 

It is a doubtful advantage for the farmer to buy cotton 
cloth for five cents per yard that is really worth ten, when 
in consequence of the low j)rices of this and other prod- 
ucts he is compelled to part with his wheat at a ]>eggarly price 
to enable the producers of these products to purchase 
it. In this exchange money is the object because of its 
scarcity, and not the incident or instrument as it would 
be if it were suihciently al)nndant. The great majority of 
ideas w,e hear regarding money comes from the owners of 
money. This of itself has fastened upon the people a line of 
thought in some instances absolutely fatal to their own best 
interests. They say a day's work will buy as much as it ever 
would. That may be true, but there are three millions of our 
l)eople, at the present time unable to find the day's work. 
They tell us a dollar will purchase as nmch of the necessities 
of life as ever before, yet the great difficulty lies in getting the 
dollar. The true way to examine this great question is, how 
many dollars will a day's work purchase, or how many dollars 



APPENDIX. 249 

will the products of labor buy ? This is the correct test, and 
when labor or its products will purchase less dollars to-day 
than a year ago, the proof is positive that money is dearer and 
consequently everything else cheaper. Compare interest on 
money now and a few years ago with the price received for 
products. It will not only prove that money has increased in 

value but that it must be included in all " other thine-s" that 

o 

are cheapened, in order to bring about anything like fair 
play. Fifteen years ago money rented at ten per cent and 
wheat sold for two dollars per bushel ; fifty bushels paid the 
interest on one thousand dollars, I^ow money loans at seven 
per cent and wheat sells at seventy cents per bushel ; instead 
of taking fifty bushels to pay the interest it requires one 
hundred. If the use of money had lessened in value with 
wheat, interest would be to-day three and one-half per cent. 
N"othing in the end is cheap to one producer that is made so at 
the loss of another producer. 

Let us examine carefully the wage statement of the last 
40 years from the census reports. I will take up the manufac- 
tures, only : ■; 

In 1850, there were 95T,000 hands employed. They pro- 
duced, less raw material a-nd wear of machinery, nett, $437,- 
000,000. Average wages, each, $248. Multiplying the num- 
ber of employes by the average wages received gives us the 
following solution : The laborers received 54 per cent of this 
increased value as wages ; the employers received 46 per cent 
of the same for profits. Or, each laborer received $248, and 
each employer received from the same laborer's profit on liis 
labor $209. 

During 1860, 1,300,000 hands produced $805,000,000; 
wages, $292 ; labor received 47 per cent, capital 53 per cent ; 
each laborer received $292 ; gave capital $327.50. 

During 1870, 2,000,000 hands produced $1,310,000,- 
000 ; wages, $310 ; labor received 47 per cent, capital 



250 PHILOSOPHY OF PRICE. 

5?> per cent ; each laborer received $310 ; gave capital 
1345. 

During 1880, 2,739,000 hands produced $1,834,000,000; 
wages, $346 ; labor received 51 2-3 j^er cent, capital 48 1-3 ; 
each laborer received $346 ; gave capital $323.50. 

Of course, this vast amount of profit does not go into the 
pockets of manufacturers, wholly. A jjortion pays rent, taxes, 
interest — -pays for lawyers, directors, etc., etc. The fact I desire 
to impress is, that fully one-half of the wealth produced by 
the laborer goes from him and into the pockets of those whose 
interest it is to take with each year more and more of labor's 
products, with no return whatever. In this difference between 
wages paid and the proceeds of labor lies hidden the germ of 
all profit, interest and rent, of all pauperism, all want, and 
nearly all crime. How true the poet : 

"The seed ye sow another reaps; 
The wealth ye find another keeps." 

For these reasons and from these causes, laborers have 
been compelled to band together, and are putting into practice 
in all parts of the w^orld, in one form or another, the God-given 
right of self -protection. For years capital has considered itself 
thoroughly entrenched behind the law, but to-day it is 
looking up the weak points. It has heard the sullen 
murmur. 

" Do you dream," said the old Sheik Ilderim, of Medina, 
a thousand years ago, to certain Koman ingrates, ''do you 
dream, because the Proj)het of Allah dwells now beyond the 
bridge of Al Sirat, that therefore he is dumb, and deaf, and 
blind ? I tell you, by the splendor of God ! there is tempest 
brooding on his brow, there is lightning gathering in his soul 
for you!" 

Men often ask what has brought about tlie present labor 
movement and the order of Knights of Labor ^ It began with 
the employer losing personal feeling toward his laborers, by 



APPENDIX. 251 

looking upon tliem as so many beasts of burden ; regarding 
their efforts as so much commodity sold in the market. They 
were hired for the cheapest price, worked to the utmost limit 
of endurance, and, when used up, thrown aside like any other 
old and worthless machinery. The employers grew richer ; 
luxury and extravagance increased among them. The thinking 
laborer, noticing this, asked himself : "Is my condition im- 
proved ?" He could but know it had not improved. His daily 
bread was not earned with less toil, nor was he any more certain 
of steady work. Being brought together in large shops with 
those of like condition, what was more natural than to talk 
over these matters, to discuss their wrongs and sufferings. A 
class feeling soon developed under these circumstances, which 
could only end in united action. Free competition imposed no 
restraints upon the powerful — they were at liberty to exploit the 
poor to their heart's content. The strength on the one side was so 
great and the ability to resist on the other so insignificant that 
there could exist no freedom of contract. As Sismondi said : 
"The rich man labored to increase his gains, the poor man to sat- 
isfy the cravings of his stomach. The one could wait, the demands 
of the other were imperative." As the knowledge of their 
wrongs became more apparent, the yoke of oppression began to 
get heavier. At last the idea of banding together for mutual 
protection against a common foe began to obtain and has 
resulted in these trade unions, Knights of Labor and — don't 
start — Grangers. Let me say at this point : United Labor, 
to-day, does not seek charity, does not ask for alms, is not beg- 
ging bread. Listead of this it stands before the world demand- 
ing justice, asking for its God-given rights, and seeking for 
those privileges that were born with the human family — that of 
earning honorably the food it eats and the clothes it wears. 
These demands must be granted, these wrongs must be 
righted, or the whole fabric of our civilization will crumble as 
has others. The interests of the farmer and the Knights of 



252 PHILOSOPHY OF PRICE. 

Labor are identical. Both are at war with a common enemy — 
monopolies or corporations. 

Did you ever think what a corporation is, and its use ? It 
is an artificial agency of man destined to countervail certain 
great natural and salutary laws. It is a natural law that the 
man who acquires capital shall administer it ; his administration 
of it and his responsibility for such administration being of the 
essence of his proprietorship, such use of it should cease 
with his death. In other words, the natural law which operates 
to prevent the irresponsible use of capital and the undue 
accumulation of wealth is the law of personal responsibility 
for what a man has, and that it shall be distributed at his death. 
Corporations never die ; they keep on accumulating capital and 
power, defying the law of death, which arrests all human enter- 
prises. The enormous advantages of corporations over individ- 
uals is noticed at a glance. This is one of the vested rights we 
read so much about. 

When you hear of the next labor strike, don't get cross 
don't say that these Knights are disturbing business, but send 
them some wheat, or pork or beef — something that will sustain 
them in this fight. They are contending for living wages, that 
will enable them to pay you good prices for your products, 
that in tlie end you can pay that mortgage or that note or 
account without quite so much hard labor. The people are not 
blind to their wants, neither are they oblivious to the danger, 
that threatens not only them but our whole social condition. 
They know a permanent laboring class is being formed ; they 
reahze the full import of that situation, because they know the 
conditions under which it is possible to exist. A permanent 
laboring class is a certain number of our people doomed to per- 
petual servitude ; without hope, with nothing better in pros- 
pect than the everyday drudgery of the slave. Any change 
for them would be better ; they could be no worse ; from this 
fact comes the great danger. Joliii Stuart Mill says : "If the 



APPENDIX. 253 

bulk of tlie liiiman race are always to remain as at present, 
slaves to toil in wliich they liave no interest and therefore feel 
no interest, drudging from early morning till late at night for 
bare necessaries, and with all the intellectual and moral defi- 
ciencies which that implies — without resources either in mind 
or feeling — untaught, for they cannot be better taught than 
fed ; selfish, for their thoughts are all required for themselves ; 
without interest or sentiments as citizens and members of soci- 
ety, and with a sense of injustice rankling in their minds, 
equally for what they have not and what others have, I know 
not what there is which should make a person of any capacity 
of reason concern himself about the destinies of the human 
race." What a fearful picture, and yet how true ! It shows 
us vividly the condition of this permanent laboring class 
which, under our present financial laws, is rapidly forming. 

O luxury ! thou curst by Heaven's decree 

How ill exchanged are things like these for thee t 

How do thy potions, with insidious joy, 

Diffuse their pleasure only to destroy ! 

Kingdoms by thee, to sickly greatness grown. 

Boast of a florid vigor not their own. 

At every draught more large and large they grow, 

A bloated mass of rank unwieldy woe ; 

Till sapped their strength, and every part unsound, 

Down, down they sink, and spread a ruin round. 

"The iron law of wages," says Ricardo, " is the natural 
price of labor which is necessary to enable the laborers, one 
with another, to subsist and to perpetuate their race without 
increase or decrease." 

" Labor," says Karl Marx, "• is bought at its exchange value 
and sold at its use value." Exchange value is the least amount 
that will permit the laborer and his family to live, while the 
use value is all the employer can squeeze out of it." 

" You believe, perhaps, fellow laborers and citizens," said 
Lassalle, "that you are human beings, that you are men. 
Speaking from the stand-point of political economy, you make 
a terrible mistake. You are nothing but a commodity, a high 
price for which increases your numbers, just the same as a high 



254 PHILOSOPHY OF PRICE. 

price for stockings increases the number of stockings, if there 
are not enough of them — and you are swept away. Your 
number is diminished b}^ smaller wages, by what Malthus 
calls the preventative and positive checks to population. Just 
as if you were vermin, against which society wages war." 

" 111 fares thfi land, to hastening ills a prey, 
Where wealth accumulates, and men decay; 
Princes and lords may flourish, or may fade: 
A breath can make them, as a breath has made; 
But a bold peasantry, their country's pride. 
When once destroyed, can never be supplied." 

— Goldsmith. 

This condition must be bettered ; but how ? Labor laws 
have proven no good, as they are easily evaded. Arbitration 
only weakens labor, and strengthens its oppressors. Lectures 
upon the duties and relations of labor and capital is but idle 
wind. Some factor must be brought to bear upon this ques- 
tion that of itself will bring about the desired change. That 
factor, in my judgment, is money. Through its scarcity all 
these evils overtake us, and by its abundance prosperity and 
joy return. From the earliest economic history to the present, 
the plain fact that an increase of money has been beneficial 
and a decrease disastrous to the business and prosperity of the 
human race has been fully recognized. In fact, the degrees 
between barbarism and civilization are clearly defined by the 
volume of the circulating medium. This is no longer a party 
question, it is national ; its tiiith is appreciated by men in all 
parties and in all conditions of life. To the laborer, for all 
producers are laborers, the volume of currency is of great im- 
portance, as it fixes the pri6e both of labor and its products. 
Increase the amount of currency and prices advance ; decrease 
the amount of currency and prices fall. This rule is infallible. 

Whenever prices have become adjusted to a given amount 
of currency, an increase of that amount, other things remain- 
ing unchanged, will cause a rise, and decrease will cause a fall, 
in prices. But under such conditions other things never do 
remain unchangetl. There are powerful causes, ixjoi*al aaid ma- 



APPENDIX. 255 

terial, which invariably operate, when money is increasing in 
volume, to moderate the rise in prices, and to intensify their 
fall when it is decreasing. Hence, the fall in prices caused by 
a decreasing volume of money would be much greater in de- 
gree than would be the rise caused by a proportionately in- 
creasing volume. 

"Whenever it becomes apparent _that prices are rising and 
money falling in value in consequence of an increase of its 
volume, the greatest activity takes place in exchanges and pro- 
ductive enterprises. Everyone becomes anxious to share in the 
advantages of rising markets. The inducement to hoard money 
is taken away, and consequently the disposition to hoard it 
ceases. Its circulation becomes exceedingly active, and for the 
very plain reason that there could be no motive for holding or 
hoarding money when it is falling in value, while there would 
be the strongest possible motive for exchanging it for proper- 
ty, or the labor which creates property, when prices are rising. 
Under these circumstances labor comes into great demand and 
at remunerative wages. This results in not only increased 
production, but increased consumption, as the wants and ex- 
penditures of laborers increase with their earnings." 

"At the Christian era the metallic money of the Roman 
Empire amounted to $1,800,000,000. By the end of the fif- 
teenth century it had' shrunk to less than $200,000,000. Dur- 
ing this period a most extraordinary and baleful change took 
place in the condition of the world. 

Population dwindled, and commerce, arts, wealth and 
freedom, all disappeared. The people were reduced by pov- 
erty and misery to the most degraded conditions of serfdom 
and slavery. The disintegration of society was almost com- 
plete. Tlie conditions of life were so hard that individual 
selfishness was the only thing consistent with the instinct of 
self-preservation. All public spirit, all generous emotions, all 
the noble aspirations of man, shriveled and disappeared as the 
volume of money shrunk arid prices fell. 

History records no such disastrous transition as that from 
the Roman" Empire to the Dark Ages. Yarious explanations 



256 PHILOSOPHY OF PKICE. 

have been given of this entire Ijreaking down of the frame- 
work of society, but it was certainly coincident with a shrink- 
age in tlie vohime of money, which was also witliout historical 
parallel. The crumbling of institutions kept even step and 
]xice with the shrinkage in the stock of money and the falling 
of prices. Ail other attendant circumstances than these last 
have occurred in other historical periods unaccompanied and 
unfollowed by any such mighty disasters. It is a suggestive 
coincidence that the iirst glimmer of light only came with the 
invention of bills of exchange and paper substitutes, through 
wdiich the scanty stock of the precious metals was increased in 
efficiency. But not less than the enei'gizing influence of 
Potosi and all the argosies of treasure from the New World 
were needed to arouse the Old World from its comatose sleep, 
to quicken the torpid limbs of industry, and to plume the 
leaden wings of commerce. It needed the heroic treatment of 
rising prices to enable society to reunite its shattered links, to 
shake off the shackles of feudalism, to relight and uj^lift the 
almost extinguished torch of civilization. That the disasters of 
the Dark Ages were caused by decreasing money and falling 
prices, and that the recovery therefrom and the comparative 
prosperity which followed the discovery of America were due 
to an increasing suj)ply of the precious metals and rising 
prices, will not seem surprising or unreasonable when the noble 
functions of money are considered. 

Money is the great instrument of association, the very 
fibre of social organism, the vitalizing force of industry, the 
protoplasm of civilization, and as essential to its existence as 
oxygen is to animal life. Without money civilization could not 
have had a beginning ; with a diminishing supply it must lan- 
guish, and, unless relieved, finally perish." 

" It is in a volume of money keejjing even pace with ad- 
vancing population and commerce, and in the resulting steadi- 
ness of prices, that the wholesome nutriment of a healthy 
vitality is to be found. The highest moral, intellectual and 
material development of nations is promoted by the use of 
money unchanging in its value. That kind of money, instead 
of being the oi>pressor, is one of the great instrumentalities 
of commerce and industry. It is as profitless as idle machinery 
when it is idle; difi:ering from all other agencies, it cannot 
l)cnefit its owner except when he parts with it. It is only 
under steady prices that the production of wealth can reach its 
permanent maximum, and that its equitable distribution is pos- 
sible. Steadiness in prices insures labor to all and exacts labor 



APPENDIX. 257 

from all. It gives security to credit and stability and prosper- 
ity to business. It encourages large enterprises, requiring time 
for their development, and crowns with success well matured 
and carefully executed plans. It discourages purely speculative 
ventures, and especially those based upon disaster. It encour- 
ages actual transactions rather than gambling on future prices. 
It metes out justice to both debtor and creditor, and secures 
credit to those who deserve it. It prevents capital from op- 
pressing labor and labor from oppressing capital, and secures 
to each the just share of the fruits of industry and enterprise. 
It secures a reasonable interest for its use to the lenders of 
money, and a just share in the profits of production to the bor- 
rower. It keeps up the distinction between a mortgage and a 
deed. It insures a moderate competence to the many rather 
than colossal fortunes to the few at the expense of the many." 

When the stock of money is shrinking and prices are fall- 
ing, this conversion can only be made at rates continually grow- 
ing more unfavorable, while at the same time the products of 
the laborer for whose wages sacrifices have been made are also 
undergoing a shrinking of money-value. Thus loss and sacri- 
fice are encountered at every turn, and the owners of other 
capital than money shrink from the friction of exchange, with- 
draw from productive enterprises, and only exchange as much 
of their property for money as will suffice to meet the neces- 
saiy expenditures of living, which are reduced to the most 
economical level, as it is principal and not income that is being 
consumed. Little more labor will be employed under these 
circumstances than is sufficient to support the owners of capi- 
tal on this parsimonious basis, and as a consequence the labor 
market will be overstocked, and the competition between 
laborers will reduce wages to a starvation level. But during 
this period, when property is being sacrificed to meet current 
necessities, and laborers are being remitted to idleness and des- 
titution, money fattens on the general disaster. 

The worst effect, however, economically considered, of 
falling prices, is not upon existing property nor upon debtors, 
evil as it is, but ujDon laborers whom it deprives of employment 



258 PHILOSOPHY OF PKICE. 

and consigns to poverty, and upon society, which it deprives of 
that vast sum of wealth which resides potentially in the vigor- 
ous arms of the idle workman. A shrinking volume of money 
transfers existing property unjustly, and causes a concentration 
and diminution of wealth. It also impairs the value of existing 
property by eliminating from it that important element of 
value conferred upon it by the skill, energy and care of the 
debtors from whom it is wrested. But it does not destroy any 
existing property, while it does absolutely annihilate all the 
values producible by the labor which it condemns to idleness. 
The estimate is not an extravagant one that there are now in 
the United States four million persons willing to work, but 
who are idle because they cannot obtain employment. Tliis 
vast poverty-stricken army is increasing, and will continue to 
increase, as long as falling prices shall continue to separate 
money-capital, the fund out of which wages are paid, from 
labor, and to discourage its investment in other forms of 
property. 

Labor, unlike money, cannot be hoarded. The day's labor 
unperformed is so much capital lost forever to the laborer, and 
to society. It being his only capital, his only means of exist- 
ence, the laborer cannot wait on better times for better wages. 
Absolute necessity forces him to dispose of it on any terms 
which tlie owners of money dictate. 

These are the conditions which surround the laborer 
throughout the commercial world to-day. The labor of the 
past is enslaving the labor of the present. At least that por- 
tion of the labor of the past which has been crystallized into 
money is enabled through a shrinkage of its volume and while 
lying idle in the hands of its owners to increase its command 
over present labor and over all forms of property and to trans- 
form vast numbers of honest and industrious workmen into 
tramps and beggars. These laborers must make their want^ 
conform to their diminished earnings. They nnist content 



APPENDIX. 



259 



themselves with such things as are absohitely essential to their 
existence. Consumption is therefore constantly shrinking 
toward such limits as urgent necessity requires. Production, 
which must be confined to the limits indicated by consumption, 
is constantly tending toward its minimum, whereas its appli- 
ances, built up under more favorable conditions, are sufiicient 
to supply the maximum of consumption. Thus idle labor, idle 
money, idle machinery, and idle capital stand facing each other, 
and the stagnation spreads wider and wider. The future affords 
no hope or prospect of improvement, except through a change 
in financial policies. 

This is my version of the cause and remedy for the pres- 
ent distressing condition of labor. It may not please you ; it 
may not meet with your approval ; yet it is honestly given, 
with the hope that it or some other theory may be apphed to 
wipe out this misery and wretchedness. 

I sincerely beheve our present civihzation is in danger by 
reason of this labor question ; that our further advancement 
depends upon its proper solution. 

When the Great Augustus was transforming a Eome of 
brick to a Eome of marble; when its wealth seemed rapidly 
increasing ; when its victorious legions were extending its bor- 
ders in every direction ; when in its manners and customs it 
was becoming more and more refined; when Art and Litera- 
ture were making rapid advances, who would have prophesied 
then that Eome had reached its zenith, that its bright sun 
would go down in black midnight, that the bat and the owl 
would soon inhabit the palaces of the Csesars ? Yet that was 
true ; it went down amid the gathering gloom of the Dark 
Ages, never to reappear. Greece also followed, 
"That land of scholars and nurse of arms." 
Soon we find Socrates drinking the deadly hemlock, and 
Demosthenes slaughtered in the sanctuary of the gods. We 
learn that the Huns and Yandals, together with other vast 



260 PHILOSOPHY OF PRICE. 

hordes from tlie North, swept over these nations with the 
besom of destruction, leaving nothing but ruins and barbarism 
behind. 

We read of the great law-giver, Lycurgus ; of the wisdom 
of Solon ; the heroism of Leonidas ; the patriotism of Cincin- 
natus, and the statesmanship of Graecus ; of the wars of Caesar, 
Trojan and Constantine. We are made acquainted with their 
great acts and deeds, but look in vain for the benefits or results. 
Why were their ideas of government, social life, and the best 
interests of mankind, permitted to sink into the unknown of 
the Dark Ages, from the Fourth to the Fifteenth centuries, a 
period of more than one thousand years ? The broad empire 
of Augustus Csesar was made bright noonday by the birth of 
the Son of God. Why did that star at Bethlehem sink below 
the horizon of human vision only to reappear at the reforma- 
tion after a period of more than fourteen hundred years? 
Wliy, I ask, was a civilization begun so auspiciously, allowed 
to sink back into oblivion ? We can only answer by saying it 
was true. 

Was their civilization of a low order ? Let us examine. 
What position in poetry does the Iliad of Homer, or the 
^Eneid- of Yirgil occupy ? Where shall we place the Phillipics 
of Demosthenes, or the orations of Cicero, the philosophy of 
Plato, or the massive intellect of Euclid or Aristotle ? 

Would Hannibal, Alexander or Ca3sar lose by comparison 
with the great military commanders of the present day ? No. 
The world never saw men in their several spheres who were 
their superiors, .^et, notwithstanding all this, the present gen-' 
eration can only look with wonder upon the ruins of their 
greatness, and speculate as to the means in which this whole- 
sale destruction was brought about. Our present civilization 
has been made possible by fire and blood, and must be watched 
closely and protected carefully. 

The fire which burned the body of John Huss in the early 



APPENDIX. 261 

part of tlie fifteenth century burns even now. A toreli was 
lighted then which to-day brightens the universOo Belted 
knights led by a mitered bishop curbed the proud spirit of 
haughty King John, and wrested from him the first great bill 
of human rights — the Magna Charter. 

The pride of Charles I was broken by the honest piety 
and unsheathed sword of Oliver Cromwell. Our own nation 
was carved out of an unbroken wilderness. Deeds of heroism, 
loyalty of purpose, and judgments unbiased by prejudice, have 
given us the grandest nation on the face of the earth. But 
amid all this greatness, and with all this prosperity, are we oc- 
cupying safe grounds? Has not our civilization reached its 
zenith ? We look about us and find poverty and distress in 
the midst of plenty; hunger and nakedness amid bursting 
granaries and crowded warehouses. The wail of the starving 
is wafted into the banquet halls of the wealthy. The cry of 
the unemployed comes up from every part of our land, and 
the miseries and -wretchedness of poverty are seen at every 
turn. 

Our situation is almost analogous to that of Rome and 
Greece. Will it end as did they? Who can tell? Then, 
the legions, the army, whose aid and friendship enabled 
any one to govern, was bought and sold and the people, 
the oppressed, paid the tribute-money. JSTow, our public offi- 
ces are put up at public auction, and those who have the 
longest purse and the most elastic conscience are usually the 
successful bidders. 

It is claimed that we could not go back to barbarism, as 
there is no barbarism to conquer ns. Go into the by-ways and 
hedges of civilization, the slums of our cities and the yards of 
our penitentiaries and jails. What do you find there ? Worse 
foes to the elevating sentiments of civilization than ever were 
the Huns and Yandals of old. The whole world has gone 
mad for gain. Money seems to be the only incentive for activ- 



202 PHILOSOPHY OF PRICE. 

ity. Everytliing is swallowed np in that one blind rage. Pres- 
ent joys, future ]3i"0spects, kindly hopes and even the future 
world is valued in dollars and cents. When John sent his 
messenger to Christ, he directed him to ask, "Art thou he that 
should come, or do we look for another ? " Christ said, " Go, 
show John those things which ye now hear and see. The 
l)lind receive their sight, and the lame walk ; the lepers are 
cleansed and the deaf hear; the dead are raised up." Was that 
all 'i No, that which by being last was witnessed as the climax 
of all his deeds, more important than either : "The poor have 
the gospel preached unto them." Going into our churches of 
the present day, knowing the poverty and distress among the 
people, knowing the many ragged coats and threadbare gar- 
ments w^hicli necessity compels to be worn, may we not ask, 
upon beholding the rich clothing and costly apparel seen on 
every side : Is this the religion of Christ, or are we to look 
for another ? 

This state of things can not endure. 

Something must be done to break down the barrier be- 
tween rich and poor ; between those who have and those who 
have not. A right to live comfortably, work honorably, and 
act independently, must in some manner and through some 
medium be granted to all. For six thousand years Capital in 
various forms has oppressed Labor. For six thousand years- 
tlie cries of the victims and the shouts of the victors have 
mingled together. For six thousand years the wild shrieks of 
the vanquished and the hoarse laugh of their persecutors have 
together ascended to the throne of God. 

Well might we exclaim: "How long, oh. Lord, how 
long ! " During all these years this black midnight has envel- 
oped labor. During all these years labor has struggled man- 
fully to dispel this gloom. Some have prayed earnestly to see 
the morning, but went down to their graves in the gloaming. 
Others have worked earnestly and well, but died in the even 



APPENDIX. 263 

ing. Some fouglit on and hoped on, but went over to the 
wide beyond before the meridian of midnight. Again, others, 
beheving the time ahnost at hand, pkmged into the thickest of 
the tight, only to perish in the small hours of the waning 
night. But to us, here in the last quarter of the nineteenth 
century, are given, if we wisely improve our time, the long- 
looked-for privilege of beholding the gray in the east which 
betokens the sure rising of the orb of day. And unless these 
signs fail, unless we are recreant to our most solemn duties, 
we shall see, before the beginning of a new century, the sun, 
that great prototype of creative power, riding majestically high 
in the blue dome of heaven, sending down to earth its life- 
giving rays, upon Labor, protected in its rights, free in its 
action, and permitted to mark out its own destiny. 




INDEX. 265 



INDEX. 



Ability to Purchase — Establishes tke price, page 15 ; what 
ability to purchase is, he?/ obmned, etc., 18 ; depends 
upon price, 26 ; governs what we shall eat, 214 ; Eng- 
land's ability to purchase, 214 ; what an ability to pur- 
chase would do, 215, 216. 

American Review — Quotation, 52 ; on prices, 93. 

Allison Sir Archibald — Sufficient and contracted currency, 72 ; 
' in his history of Europe, two great events, 75, 76 ; offsets 
of less currency, 153. 

American Currency — Wanted, why? 167, 168. 

Aristotle — Value in money, 196. 

Barter — Between tribes, 13 ; in exchange, 27 ; barter, how 
destroyed, 31. 

Bonds — National, bought with paper and paid in gold, why 
should they be worth 20 per cent premium when farms 
cannot be mortgaged, etc., 95. 

Bonds — Sold, 107 ; 5-20 bonds sold abroad, 109 ; bonds selHng 
at premium, 110 ; discussion as to how the bonds should 
be paid etc., 110 ; the gold cost of bonds and greenback 
cost compared, profit to bankers, 110 ; bonds payable in 
paper or coin, 111 ; Sherman's letter and speeches, 111, 



200 PHILOSOPHY OF PRICE. 

112; bonds, how l)onglit, 113; bonds, premium, 115 ; 
bonds of 18T0, how taken etc., 121 ; reasons that should 
govern such contracts, 122 ; effects of changing the stand- 
ard of payment, 123 ; no silver ever paid on a bond, 124; 
law of 1862 providing for payment of a per cent of bonds, 
124; act under which bonds were issued, 124, 125; read- 
ing of the bond, 125, 126 ; amount of bonds bought between 
1875 and 1878, comments, 126 ; bonds can be -psdd in sil- 
ver, 127 ; bonds due and payable at any time, 127, 128 ; 
effect of paying in silver, 129. 

Bodin — In 1557, quotation, 32. 

Bowen Francis — Increase of currency, 57 and 58, 

Bryant — In liis work on money, result of price, 76 ; on money, 
172, 173, 174. 

Boston Advertiser — Increase and decrease of currency, its 
effects, 77. 

Byles Judge John — The effects of increasing and contracting 
the currency of England, 77, 78, 79, 80. 

Bullion Report — To parliament 1810, on the high price of bul- 
lion, 80, 81. 

Bank of England — Its examination in 1847, testimony of its 
officers, 86, 87, 88. 

Blake — Report on precious metals, 92. 

Bayard Senator — Kind of money to pay for bonds, 113. 

Beck Senator — Speech on the silver question, 130, 131, 132, 133. 

Burke — On changing contract, 147. 

Bancroft — Effects of shrinking currency, 147. 

Belknap — Effects of shrinking money, 148, 149. 

British Ambassador to France — Effect of less money, 152. 

Commerce — Unrestricted 17 ; cur'cy contraction discussed, 50. 

Currency — Its increase and decrease and their effects, from dif- 
ferent authorities, 51 to 94 ; currency contraction, 65 ; its 
effects, 94, 95, 96 ; effects \\])on real estate transactions, 96 ; 
worse and worse, 97 ; contraction, story of, 107 ; currency, 
amount of in 1866, what it consisted of, 108 ; its contrac- 
tion laws, 108 ; currency contraction continued, 109 ; cur- 
rency burned up, 109 ; amount of currency reduction up 
to 1868, 110; seven-thirty bonds as currency, 140; cur- 
rency contraction, 140 ; amount and effect of contraction, 
143; lessening of volume, 164; the natural result, 165; 
currency volume governs prices, 166 ; distinctive currency 
for eacii nation, 170 ; reasons, 170, 171 ; expensive cur- 
rency, 175, 176 ; kind and amount of currency, 177 ; cur- 
rency for sparsely settled countries, 194. 



INDEX. 



267 



Crawford "William H, — Quotation, 51. 

Chevelier Professor — Increase of currency, 60. 

Carey Henry C. — Increase of currency, 66, 67, 68, 72. 

Clay Henry — Eloquent speech on currency during the debates 
of 1840, pages, 68, 69 70, 71, 94, 151. 

Copernicus — His address to the King of Poland, 74. 

Chase Solon—" Them Steers," 95. 

Carey Mathew — Effect of less money, 149. 

Caireus Prof. J. E. — Greenbacks and foreign trade, 181. 

Credit — How maintained, 114 ; how improved, 115. 

Campaign— Of 1876, 118. 

Contract — Between bondholders and people, howmanaged, 145; 
with bondholders changed, 116. 

Confidence and good times, 164. 

Coin Basis— Shown up, 176 ; kind of currency not decided yet 
in Europe, 182; change of currency, its effect, 183; 
metal as a basis for currency, objections, 183, 184, 185 ; cur- 
rency and Kapoleon, 185, 186. 

Currency— Supply, where from, 186, 187, 188 ; currency, how 
inflated and contracted, 188 ; power of banks over cur- 
rency, 188, 189 ; what currency is required to perform, 
witli tables, 189, 190, 191 ; credit currency, bank checks 
etc., its cause, 191, 192 ; currency and its relation to pro- 
tection, 213, 214 ; currency and its effects on business, the 
cause and remedy discussed, 218, 219 ; currency makes the 
extreme between poverty and prosperity, 226 ; currency 
the great panacea, 232. 

Capital and Labor — the war between, 217, 220. 

Doubling of Debts — Discussed, 50. 

Debt— Public statement for 1866, 138 ; its condition, 143, 144 ; 
it has not been lessened in labor value, 144. 

Doubleday's Financial History of England— Effects of contrac- 
tion, 73, 74, 156. 

Davis Garrett — Kind of money to pay bonds, 113. 

England's Prosperity — During war with Napoleon. 50. 
Economists — Being a creditor nation, etc., 129. 
Ewing Thomas — On Resumption, 156.^ 
Exchanges — Leveled up with commodities, 174. 
Experts — Governed by ability to purchase, 215, 216. 

Financial Reports to Congress, 32. 
Fanchett Leon — Quotations, 53, 64. 
Fundin^Bill of 1870, 116. 



268 PHILOSOPHY OF PKICE. 

Gallatin Albert — From his work on money, varieties of price, 
76 ; value of money, 201. 

Gosclien Hon. Geo. I. — Address to Banker's Institute, London, 
1883; effects on price of the currency of a nation, 81, 82, 
83, 84. 

Garfield — "The people would remember the bankers of "Wall 
street" etc., 109. 

Grant President — Letter on silver, 119. 

Greenbacks — Rescued from destruction, 120. 

Gibbs H. H. — England a creditor nation, 129. 

Government Honor etc., 129. 

Government Debts — How to pay, etc., 129. 

Gordon Senator — Contraction, its effects, 153, 154, 155. 

Gold — Its scarcity etc., 160 ; demonetized, 169, ITO ; bought 
by all nations, the result, 178 ; the struggle for gold and 
the effects, 193 ; gold or silver not fair standards of pay- 
ment, 194. 

Hume David — Quotation, 51. 

Hunter R. M. T.— Quotation, 51. 

Ilorton Mr. — Increase of currency, 62. 

Humboldt — Relating to amount of gold and silver and its ef- 
fects, 76, 77 ; value of money, 201. 

Hamilton Alexander — Use of money, evils of contracting it, 84. 

Hughes Judge Robert, of Virginia — ^Effects on price of increas- 
ing or decreasing amount of money, 84, 85. 

Interest — Discussed, 38 ; lowering rates of interest indicates 

financial prostration, 42. 
Industry — The true cause of its stagnation, 98. 

Jerons W. J. — Increase of currency, 55, 56 ; value of money, 

201 ; value in cun-ency, 202. 
Jacob Mr. — Increase of currency, 61. 
Jacob William — His examination into the quantity of money 

at various periods, tables, 74, 75. 
Jefferson — On currency basis, 177, 178. 

Kellogg Mr. — Sacredness of money, 219. 

Labor — Sole producer of wealth, 18 ; labor employs capital but 
not money, 23 ; labor products ruling factor in exchange, 
24 ; quotation, 26 ; effect of a shrinking volume of money 
discussed at length, 43, 44; conflict between labor and 
capital, 44 ; reasons, 45 ; labor cannot be hoarded, con- 
ditions which surround lalior discussed, 48 ; numbei: of idle 



INDEX. 269 

laborers and the effect, 49 ; a blow at labor, etc., 50 ; labor 
and its products lose value, 95 ; where found, 95 ; labor 
thrown out of employment by fallina; prices. 

Laboring Classes — ^Their condition, 106 ; labor and capital con- 
flict, etc., 14:6 • laws favoring capital as against labor, 146 ; 
three million unemployed laborers, the result, 163 ; labor 
and protection, 211 ; pauper labor act, 212, 213 ; labor laws 
oppressive, 218 ; labors reward, 219 ; advantages of well 
paid labor, 222, 223, 224; Knights of Labor, their de- 
mands, comments, 232. 

Laveleye Professor — Quotation, 53 ; value of money, 201. 

Linderman — Increase of currency, 64. 

Laws — Should protect the weak as against the strong, 103. 

Law John — Yalue in currency, 202, 

Locke John — Value of money, 93. 

London Economists — Evils of shrinking money, 100 ; amount 
of gold, 194. 

London Times — Less money in France, 152, 153. 

Levi Prof. — Why gold was demonetized, 169. 

Mill Jolm Stuart — Overproduction, 15 ; increase of currency, 
54, 55 ; value in currency, 202. 

McCuUoch J. K. — Quotation, 52 ; effect of a change of con- 
tract, 116, 157 ; value of money, 201. 

Mason and Labor — Increase in currency, 63. 

Morton O. P. — How bonds should be paid. 

Marshall Chief Justice — Effects of less currency, 149, 150. 

Minot — Cause of public disorder, 151. 

Monetary Systems — The curse of, 227. 

Money — ^Does not purchase products, example, 22 ; money 
levels up bargains, 23 ; money not used up in speculation, 
24 ; money is inert matter, men gather, it etc., 25 ; under 
a firm system, 28 ; quantity limited without cost of pro- 
duction considered, 28 ; how limited, 29 ; medium of 
exchange, measure of value for exchange, 30 ; creation of 
laws, substitutes for money, if money had purchasing 
power, 31 ; money of to-day, no matter what is used, the 
amount governs everything else, 32 ; money of the Roman 
empire at the Christian era and at end of the Dark Ages, 
33 ; ruinous effects of decreasing money, disasters of the 
Dark Ages, symptoms of like character in 1809, money 
the instrument of association, etc., 34 ; money increased in 
value 145 per cent between 1809 and 1848, 35 ; shrinking 
money volume enforces idleness, volume of money keep- 



270 PHILOSOPHY OF PRICE. 

iiig pace with population and business, etc., 3H ; how it 
should increase or decrease, 37 ; quantity can not be con- 
trolled arbitrarily etc., decreasing volume of money 
increases the value of each unit, 38, 39 ; increased value of 
money discussed, 42 ; quantity of money discussed, 45, 46, 
47 ; hoarded monej^ its effects, 47 ; money functions, 171, 
172 ; money-capital, the wage fund, etc., 99 ; metallic 
money an unfair measure of value, 172 ; paper money as a 
measure of value, 172 ; money, from Bryant, 172 ; paper 
money and its relation to foreign trade, 179, 180, 181 : 
money measurement compared to the yard-stick, 190 ; 
money 'ideas of gold and silver the same as in the time of 
Abraham, 198, 199 ; money value considered 199 ; how 
increased, 199, 200 ; Intrinsic value in money, 200. 

National Degradation or Civilization, 21 ; national debt in 

1866 etc., 107 ; national bonds sold, 107 ; 
New York Tribune — Statement of comparative prices of 200 

articles with table, 157, 158, 159. 
North British Review — Value in money, 208. 

Overproduction — Means a surplus of success, overproduction of 
wheat brings hunger, 14 ; ignorance regarding overproduc- 
tion 35 ; overproduction explained fully, 161. 

Otto, French Master — Effect of less money, 149. 

Price — Theory of, 10 ; how determined, 11 ; what it is, cause 
for differences in price, 12 ; price of labor governs, etc., 
21 ; dictator of civilization, the value ])ut upon labor, etc., 
25 ; is the expression in money terms, market price, 27 ; 
dependence upon currency, volume of currency indicates 
purchasable amount, 30; rise and fall of prices, reasons for, 
with increasing prices come more labor and better times, 
etc., 33 ; prices fell 60 per cent between 1809 and 1848, 
discontent in England and on the continent in conse- 
quence of falling prices, they compel capital to avoid en- 
terprises, 35 ; steady prices insures labor to all, etc., 36 ; 
gives justice to debtor and creditor, keeps up the dis- 
tinction between a deed and a moi,'tgage, 37; price de- 
creases with the volume of currency, 39 ; effects of falling 
prices in the United States, on mining and railroads, 40 ; 
on farms and securities, 41 ; prices have fallen since 
1873, 64 ; change in amount or value of money changes 
the price, 73 ; every general fall in price the result of a 
decreasing currency, 97 , falling prices a reason for icotin- 



INDEX. 



2Y1 



vesting in business, 99 ; falling prices compel capital to 
withdraw from production, 99 ; explanation of liow an in- 
crease and decrease of money increases or diminishes the 
price, 86, 101, 102; rock bottom prices the result, 163. 

Pierpont Edwards — Payment of bonds, 127 

Political Economists — 13. 

Perry Professor — Increase of currency, 60, 

Price Prof, ik^fiomy— Power of money, 77 ; vame of money, 
201. 

Peel Sir Eobert — Contracts and currency, 93. 

Public Credit Strengthening Act— 110 ;' effect of 128. 

Panic of 1847 in England— 86. 

Patterson Prof. — Yalue in Currency, 204, 205. 

Protection — to home industry defined, 209, 210,|211; protection, 
and the conditions following, 211, 212; Drotection and 
its relation to emigration and currency supply, 211, 212; 
protection and pauper labor, 212, 2i3 ; protection and 
contraction, 213, 214 ; effects of low prices on the moral 
and material interests, 225. 

Quotations — 

Allison Historian— 66, 72, 75, 76, 85, 86, 153. 

American Review — 52, 92, 93. 

Aristotle— 196. 

Bancroft Historian— 147, 148. 

Bayard Senator — 113. 

Beck Senator— 130, 131, 132, 133. 

Belknap Historian — 148, 149. 

Blake Mr.— 92. 

Bodin— 32. 

Bowen Francis — 57, 58. 

Bryant— 76, 172, 173, 174. 

Bullion Report to Parliament— 203, 204. 

Burke— 147. 

Carey Henry tJ.—<66, 67, 72, 94. 

Carey Matthew — 149. 

Cazalet Edward — 84. 

Chase Solon — 95. 

Chevelier Prof.— 60, 104. 

Clay Henry— 68, 69, 70, 71, 151. 

Congress Acts of— 110, 124, 135, 126, 127, 128, 140, 212, 

213. 
Copernicus — 74. 
Crawford Wm. H. — 51. 



272 PHILOSOPHY OF PRIEC 

Davis Garrett — 113. 

Doubleday Historian — 73, 74, 156. 

Ewing Thomas — 156. 

Fanchet Leon — 53. 

Fawcett— 64, 65. 

Gallatin Albert— 76, 201. 

Gibbs II. II.— 129. 

Gordon General and Senator — 154, 155, 16f. 

Goschen Hon. Geo.— 81, 82, 83, 84. 

Grant President— 119. 

Ilaniilton Alexander — 84. 

Ilooton Mr.— 62. 

Hume David— 51, 59. 

Humboldt— 76, 201. 

Hunter E. M. T.— 51. 

Jacob Mr.— 61, 74, 75. 

Jefferson Thomas— 177, 178. 

Jerons W. J.— 55, 56, 57, 201, 202. 

Kellogi? Mr.— 219. 

Law John— 202. 

Laveleye Prof.— 53, 201. 

Levi Prof.— 169. 

Linderman Dr. — 64. 

Locke John — 93. 

London Economist — 100, 194. 

London Times — 152. 

Marshall Chief Justice— 149, 150. 

Mason & Lailor — 63. 

McCulloch— 52, 116, 156, 157, 201. 

Mill Jolm Stuart— 15, 54, 55, 59, 202. 

Minot Historian— 150, 151. 

Morris James — 87. 

Morton O. P.— 114. 

New York Tribune— 121, 158, 159, 1«). 

North British Keview— 208. 

Otto, French Minister-149. 

Palmer John M.— 87. 

Patterson Mr.— 204, 205. 

Peel Sir Eobert— 63. 

Perry A. L.— 60, 63. 

Pierpont Edwards — 127. 

Prescott Henry J.— 87, 88. 

Price Bonomy— 77, 201. 



INDEX. 



273 



Kicardo— 55, 58, 201. 

Rothschild Baron — 53. 

Sealy Mr.— 88, 89. 

Seyd Earnest— 52, 91, 92. 

Shellabarffer Mr.— 219. . ^ .o. 

Silver Commission-33, 34, 35, 117, 118, 179, ISO, 181, 

182. 
Sherman John — 111, 112. • ^ 

Smith Adam— 54, 203. 
Soetbeer Dr.— 77. 
Stevens Thaddens— 114. 
Sullivan Sir E.— 65. 
Sumner W. G. — ^68. 

Supreme Court Decision— 134, 135, 136, 137. 
Syme Prof. — 64. 
Thompson Prof. -58, 203. 
Tooke Thomas— 59. 
Wade Hon. B. F.— 112, 113 
Walker T. A.— 61, 62, 63. 
Wayland Francis — 57. 
Weller Hon. L. H.— 221, 222 
Wolowski M.— 53. 

Rothschild Baron— Quotation, 53. 

Ricardo— Increase of currency, 55 ; value of money, 201. 
Resumption Act Bill, etc.— 117; result of specie resump- 
tion, 120. IT- -1 1 o^ 
Resolutions— 1878, declaring the bonds payable m silver, 127. 
Railroads in excess— 162; money sunk m railroads, 162. 

Smith Adam— Double value, use and exchange, 10 ; increase of 

currency, 54 ; value of currency, 202. 
Seyd Ernest— Quotation, 52 ; on price, 92. 
Syme Prof. — Increase of currency, 64. 
Sullivan Sir Edward— Increase of currency, 65. 
Sumner W. G. — Increase of currency, 66. 
Soetbeer Dr.— Value of money, 77. . oo en 

Sealy M., of England— Bank of England, power, etc., 88, 89. 
Supply and demand— Theory of, 13; dangerous doctrine, 14; 

does not establish price, 15 ; example, 16. 
Securities— How affected by falling prices ; personal property 

securities not available ; what is, 41. 
Silver coinage and its effect— 227, 228. 
Standard of value and payment explained— 229, 230. 



274 PHILOSOPHY QF PKICE. 

Silver Commission Report — Quotation 33 ; effect of resumption, 

117, 118. 
Sherman — On the kind of money with which to pay 5-20 

bonds, 111, 112 ; agent, 169. 
Stevens Thaddeus — How the bonds should be paid. 
Silver dollar dropped and silver demonetized — 116. 
Silver remonetized — 120 ; silver certiiicates, 121. 
New York Tribune on the same — 127. 
Supreme Court legal tender decision — 134, 135, 136, 137. 
Speculation and price — 163. 
Standard of payment — 166. 
Shellabarger on money loans — 219. 

Thompson Professor — Increase of currency, 58, 59; value in 

currency, 203. 
Theories for currency evils — 98. 
Table— Amount of currency, 1866 and 1886, 139. 
Table — Average circulation per capita, from 1866 to 1886, 139. 
Table— Showing failures from 1866 to 1886, 141. 
Table — Proving the debt larger than when first made, 144. 
Tables — Of Gen. Gordon, relating to contraction, 154, 155. 
Table — Showing good and bad times, and amount of currency, 

157. 
Table — Of New York Tribune, showing comparison of prices 

for more than 200 articles ; rise of gold proven, 159. 
Taxation — A basis for currency, 177. 
Trade relations with other nations — 179. 

Value — An element in exchange ; excliange not an element of 
value, 10; value basis of industrial activity; two ele- 
ments to value, utility and scarcity; value in use and in 
exchange ; intrinsic value ; commercial value, 11 ; com- 
mercial value Huctuates, inti-insic never, 12 ; commercial 
value fixed, 16 ; high commercial value a gauge of civiliza- 
tion, 17 ; value of each unit, 26, 28 ; of money how meas- 
ured, 29 ; value of paper money, 165 ; values of metal 
money how it changes, 200, 201 ; value of gold and silver 
changing, table, 205, 206 ; values changed with each other, 
206 ; value established of quantity, 206, 207 ; value, how 
measured, 206, 207 ; what the measure must be, 208 ; 
shrinkage of values discussed, 228 ; standard of value ex- 
plained, 228, 229, 230 ; standard of payment explained, 
229, 230 ; what value is, 229, 230 ; labor value discussed, 
233, 234, 235. 



INDEX. 275 

Von Barr — Evils of demonetizing silver in Germany, 86. 
Yanderbilt and the paupers — 103. 

Wealth — Yisible and invisible, 19 ; how wealth is produced, 
19, 20 ; wealth, its just distribution discussed, 230 ; wealth, 
there should be a limit, 230, 231 ; wealth in large amounts 
not beneficial, 231. 

Wages — Are reduced how, 24. 

Wolowski M. — Quotation, 53. 

Wayland Francis — increase of currency, 57. 

Walker Francis A. — increasing currency, 61, 62. 

Williamson Stephen — from his work " bad trade and its caus- 
es," effects of currency on price, 89, 90, 91. 

AYade Hon. B. F. — kind of money to pay 5-20 bonds. 

Weller Hon. L. H. — formula for better times, 220. 




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